Greater Greater Washington

Development


Was Nationals Park worth it for DC?

DC has proposed building a new soccer stadium at Buzzard Point with help from public funds. The city already did this for Nationals Park, but did it work? We can find out by doing a cost-benefit analysis.


Photo by rsmdc on Flickr.

Building Nationals Park cost $701.3 million, according to a 2008 estimate. DC contributed $670.3 million, paying $135 million upfront and borrowing another $535 million. In addition, the city spent $82.6 million of federal money on upgrades to the Navy Yard Metro station, South Capitol Street and the Douglass Bridge. That doesn't account for all the costs, but it's the final dollar cost.

In this post, we'll look at money spent on the stadium and how much the Nationals contributed. Later, we'll look at the externalities caused by the stadium and what they mean for DC United.

What the stadium cost

In addition to the costs noted above, the District lost some existing revenue. Of the $670.3 million DC paid for the stadium, $57 million went to buying and cleaning up the land for the stadium. At that price, the land likely generated as much as $200,000-$500,000 in property taxes each year, but now it's been moved off of the property tax roll. Several of the displaced businesses have left town, as did some of the residents there.

There were some additional one time costs that are hard to quantify. The city took the land by eminent domain, which Jim Titus noted carries a social cost. District employees spent time and resources preparing for baseball, not all of which were billed to the stadium.

There are also continuing costs from the stadium and baseball. Paying for the stadium pushed the District to its debt limit, which means the city can't borrow money for anything else, including the new soccer stadium. That's why the District has offered to trade the land for a soccer stadium for the city-owned Reeves Center at 14th & U streets. The games have traffic and parking impacts that would not exist otherwise, and the District often spends tens of thousands of dollars per game for security. The DC Sports and Entertainment Commission must pay $1.5 million every year to maintain and enhance the stadium, and set aside another $5 million for a Contingency Reserve Fund.

Aside for the maintenance fund, none of these other costs have been accounted for. Ignoring those, a conservative estimate is that DC paid $675 million for the stadium, $82 million for transportation upgrades to support it, and another $1.5 million a year for maintenance.

How DC pays for it

DC's budget paid for the $135 million in upfront costs for Nationals Park, but Major League Baseball (MLB) could have paid for this. MLB bought the Expos in 2001 for $120 million and then sold them in 2006 for $450 million, turning a cool profit that would have easily covered this expense. But MLB only kicked in $20 million. The Nationals paid another $11 million.

To pay the bonds it issued to cover the $535 million stadium debt, the city created four sources of revenue: A gross receipts tax on businesses that make more than $5 million a year, a share of the utility taxes paid by every non-residential taxpayer, a 4.25% special sales tax on stadium sales, and rent paid by the Nationals.

The first two are just untargeted taxes on DC businesses, and are thus related to baseball only in that the revenue is dedicated to paying for the stadium. But the sales tax is a user tax on baseball fans and the rent is obviously a direct payment by the Nationals, so those can reasonably be counted as annual baseball contributions.

Unfortunately, when DC reports sales taxes from Nationals Park, they combine the special sales tax with the regular sales tax, which is currently 6% on the same items, and the 10% tax on concessions. Is this fair? All taxpayers pay the regular sales tax and concessions tax, which pay for things like roads, schools, and other things the DC government does. This approach to calculation suggests that baseball doesn't contribute to schools or roads.

I'm sure every business would like to dedicate their sales tax to paying off their construction debt, but that isn't how anyone else gets to do things. How much of the total sales tax is the special sales tax? According to Jonah Kerry Keri in his book Baseball Between The Numbers, concession revenue is about 30% the size of ticket revenue and merchandise is about 10%. So, we could estimate the amount of the reported sales tax that is from the special baseball tax only at about 30% of the total sales tax.

In addition, much of this sales tax revenue comes from entertainment spending that would have happened without baseball. This is what economists call the substitution effect. "As sport- and stadium-related activities increase, other spending declines because people substitute spending on sports for other spending," sports economist Brad Humphreys said. "If the stadium simply displaces dollar-for-dollar spending that would have occurred otherwise, there are no net benefits generated."

Rent for the ballpark started at $3.5 million in 2009 and climbed to $5.5 million this year. From now on, rent goes up by a little less than 1.9% per year, which is below the 3.22% average rate of inflation over the last 100 years. That means that rent in real dollars will likely go down.

In addition, the Nationals would pay an extra $1 for every full price ticket sold after the first 2.5 million. So far, that's never happened. Meanwhile, property taxes on a $500 million stadium, which the Nationals don't pay, would total more than $9 million.

The total amount paid in baseball sales tax and rent for 2008-11 averaged $14.2 million, well below the $30 million a year total estimated in 2005 and the $23.5 million estimated in 2008. It would go up to $15.6 million if the Nationals were paying the full $5.5 million rent.

The debt service on Nationals Park costs the District $38 million, meaning that city taxpayers are paying between $22.4 and $23.8 million a year just on the bonds, or $30.8 million if we use only the special baseball tax. And then there's an additional $1.5 million a year in maintenance and more still on security.

Again, the Nationals could pay this. In 2010, the team made $36.6 million dollars in operating income, which means they could pay the additional bonds and the maintenance costs and still have $11.3 million in profit. Even if we use the discounted baseball sales tax and add in security costs, the Nationals would still be able to keep whatever part of $4.3 million they don't need for security. And of course, after 30 years, they would own the stadium outright. But that isn't how the deal was cut.

So far, DC taxpayers have paid $140 million to build and maintain the stadium, $82.6 million for stadium-related transportation upgrades, and another $24-32 million a year to pay off the debt and maintain the stadium. In the next segment, we'll look at the external benefits to see if DC is getting a return on such a large investment.

David Cranor is an operations engineer. A former Peace Corps Volunteer and former Texan (where he wrote for the Daily Texan), he's lived in the DC area since 1997. David is a cycling advocate who serves on the Bicycle Advisory Committee for DC.  

Comments

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Numbers are super cool and all, but anecdotally, as a human being who uses the ballpark/surrounding area, yes, emphatically, it was worth it for DC.

by Col. Brentwood on Aug 27, 2013 1:40 pm • linkreport

This area was a wasteland before the ballpark, and it undoubtedly catalyzed the development we see nearby. I'd be curious to see the increase in property and income tax collected in a half-mile radius of the ballpark from 2006-2013 as compared to 2000-2006.

by Matt on Aug 27, 2013 1:49 pm • linkreport

Col. Brentwood has it right. Looking at the numbers (thanks for the legwork) peopole should be outraged. Sadly, I don't care about numbers but am happy to have a baseball team.

I guess part of the outrage is that the money could have gone to people that need it. Could you do a follow up on how that would have worked, what it would have done for folks, and what things would look like for them now that a few years have past? Thanks.

by Me on Aug 27, 2013 1:50 pm • linkreport

Really great post.

I'll wait with interest for your next chapter on the external benefits.

by kob on Aug 27, 2013 1:50 pm • linkreport

The substitution effect is definitely real, but 85% of fans are non-DC residents (http://www.washingtonpost.com/blogs/the-state-of-nova/post/nationals-park-60percent-of-attendance-from-nova/2012/04/02/gIQATKCkqS_blog.html) whose dollars would primarily goto entertainment outside DC, so its impact is overstated.

by Mony on Aug 27, 2013 1:51 pm • linkreport

matt lets hold the benefits discussion to the next post. I suspect I will not agree with Dave C 100% on that. But this is an interesting post in itself.

re: social cost of eminent domain. In doing benefit cost analysis for projects such a roads, railroad lines, etc we do not typically add that. I would be reluctant to even try to quantify it.

Also the interest part of debt repayment should not be included as a cost IF you are going to discount the benefits stream, which is the standard way to do BCA.

by M Street Denizen on Aug 27, 2013 1:59 pm • linkreport

The initial comments confirm that 1. people who use the ballpark are in favor of it, even though people who don't use are compelled to pay (in other words, "worth it for DC" means "worth it for everyone else to pay for something I like") and 2. people reject economics outright when it doesn't confirm their view. Anyone that declares that the area was a wasteland prior to the stadium didn't know the people there. The District took it under this "wasteland" pretense, but the District would have undoubtedly been culpable in the degeneration of the area into a wasteland. They can't claim an inability to police the area or ensure safety was a result of lack of funding, given all these "super cool numbers."

by geo on Aug 27, 2013 2:04 pm • linkreport

@Matt:

Forest City has a good presentation (http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTEyODAyfENoaWxkSUQ9MTk2NzE3fFR5cGU9MQ==&t=1) it gave last July looking at the market trends in the Capitol Riverfront neighborhood. There are 3,000 residential units in this neighborhood (4,000 residents) and 10,900 residential units expected at full build-out.

Chris Leinberger has noted the huge increase in property values over the last decade next to the stadium.

"Chris Leinberger dropped a staggering statistic regarding how much DC land values have increased in the past decade. On one particular site in Capitol Riverfront, he shared, the land value was probably at around $5 per square foot a decade ago. That same land was recently sold to Toll Brothers at a cost of $825 per square foot. “That increase is stunning,” he said." (http://dc.urbanturf.com/articles/blog/keeping_dc_affordable_takeaways_from_a_recent_forum/6553)

by 202_cyclist on Aug 27, 2013 2:06 pm • linkreport

The question "could the Navy Yard area have been developed without the stadium" is an interesting one. A related piece on that general topic:

http://slate.me/1dMjjnl

by oboe on Aug 27, 2013 2:07 pm • linkreport

Counting the $82M for transportation improvements as a cost of the stadium isn't entirely justfied. As the Capitol Riverfront and South Capitol Street corridor continued to development, additional infrstructure investments would have been needed. I don't know whether an additional metro entrance would have been required but going from 1,000 residential units to nearly 11,000 and having 35,000 employees would have required additional spending on transportation improvements. Allocating all of this to the stadium is faulty accounting.

by 202_cyclist on Aug 27, 2013 2:09 pm • linkreport

If you're going to look at the benefits of the stadium, you should also include a good portion of Southwest. I know a number of people who live there now who wouldn't have lived there 5-6 years ago. Additionally, this area now has a new (2-3 years old) Safeway and several sit-down restaurants. Part of this should be attributed to the traffic geneerated by the baseball stadium.

Additionally, a stronger Capitol Riverfront will also benefit Anacostia eventually and arguably already has if rising home prices are an indication.

by 202_cyclist on Aug 27, 2013 2:15 pm • linkreport

Was/is it integral to development of the Navy Yard area? Absolutely. Should nearly the entire cost have been paid by the city? No.

Too late for that, though. Even still, it's spurring development and provides a home for the baseball team *far* better than RFK. I'd say it's good overall.

by ImThat1Guy on Aug 27, 2013 2:17 pm • linkreport

[i]In this post, we'll look at money spent on the stadium and how much the Nationals contributed. Later, we'll look at the externalities caused by the stadium and what they mean for DC United[/i]

My sense is that Dave C wanted a discussion of the costs first, and the possible benefits later

by M Street Denizen on Aug 27, 2013 2:18 pm • linkreport

There is a lot of unfair allocation of costs here. Money spent for environmental remediation would have been required whether a stadium or some other development was built here. It looks like the Frederick Douglas bridge rehabilitation was counted as a stadium cost (http://www.washingtonpost.com/wp-dyn/content/graphic/2008/03/24/GR2008032400073.html) but this has utility independent of the stadium.

Additionally, as noted above, there are a lot of fans who are not DC residents. Whether all of them would have come to DC on a Saturday or Sunday and spent money here without the stadium is questionable. Some would have but many would have stayed in Fairfax or Frederick instead.

by 202_cyclist on Aug 27, 2013 2:30 pm • linkreport

Regardless of Forest City's presentation, regarding comments by 202_cyclist and oboe, the development plan (what was called the Anacostia Waterfront Initiative), including the long term lease/sale of federal land for the Forest City project predated any inkling that a baseball stadium would be located in that area. A lot of it was spurred by BRAC relocation of Naval units to the Navy Yard (in the BRAC iteration that was before 2005, sometime in the late 1990s).

But it is fair to say that probably having the baseball stadium has accelerated interest on the part of the residents that chose to live there.

Similarly, while the stadium has had impact on the SW quadrant, plans for both the Wharf and the redevelopment of the old Southwest Waterfront Mall (I remember going to Artomatic in the pre-demolished building in 2003) long predate the decision to locate the baseball stadium on the water in Southeast.

Yes, the stadium has refocused attention on that part of the city, there is no question. But yes, the city was hosed (because it wanted to be hosed) by MLB and the Nationals in that deal. They are in fact different questions.

And there are huge opportunity costs in the loss of the ability to release more debt (not unlike how Maryland mortgaged its highway transportation funds on the ICC, and to do anything else, they had to increase state taxes on gasoline, to get out of the hole). I know e.g., it costs us the opportunity to get city funds to acquire the Takoma Theatre in my neighborhood.

A good point is made by Mony about how while the substitution effect impact is true at the metropolitan scale, DC benefits disproportionately probably, because attendees to sports events at the baseball stadium and Verizon Center are mostly from the suburbs. So we "benefit" at their expense. The costs and opportunity costs are so significant that it is questionable that DC benefits.

Although as someone commented in the thread on the DC United proposal, Virginia is smart in that they get DC to pony up for stadiums and arenas that they don't pay for, but still benefit from.

Great post.

by Richard Layman on Aug 27, 2013 2:36 pm • linkreport

Interesting analysis.

My wife and I love going to games, about 10 or 12 per season since they moved into Nationals Park, but we're not thrilled with the way the stadium was financed. The way the process worked out, where the Expos were relocating, to bring back MLB to DC sort of "forced" the city to pay for a stadium if it wanted baseball back here again.

I personally don't like publicly financed stadiums, especially when billionaire owners such as Ziggy Wilf and Arthur Blank are asking others to foot the bill.

by Fitz on Aug 27, 2013 2:41 pm • linkreport

Oh, there is no way that land value in that area even 10 years ago was $5/s.f. The Southeast Federal Center redevelopment project was in play, new office buildings were being constructed on M Street SE, plans to move the US DOT over there were underway, the AWI plan was moving forward, the Wharf development was in process, Fenty--not having yet been elected Mayor, hadn't dissolved the Anacostia Waterfront Corp., plans were moving forward to redevelop Waterside Mall. Etc.

A lot of prognosticators/pundits mislead by not presenting a full picture. I hope that wasn't the intent here.

by Richard Layman on Aug 27, 2013 2:42 pm • linkreport

The author of the book you cite is Jonah Keri, not Jonah Kerry.

by Theo16 on Aug 27, 2013 2:43 pm • linkreport

Does the District get ticket tax and food/drink tax revenue from other events held at Nationals Park? I remember the Paul McCartney concert was sold out. Earlier this year, there was a DC microbrew fest at the stadium. There are many different smaller events held throughout the year. Failing to credit this revenue to the District results in an incomplete cost/benefit analysis.

by 202_cyclist on Aug 27, 2013 2:47 pm • linkreport

DC benefits disproportionately probably, because attendees to sports events at the baseball stadium and Verizon Center are mostly from the suburbs. So we "benefit" at their expense. The costs and opportunity costs are so significant that it is questionable that DC benefits.

Good point, but at a certain point, it's the stuff that doesn't fatten the bottom line that makes a city a city. I think the elected officials should extract as many concessions as they can from team owners, and the like. But on paper, a Chicago where Wrigley Field has been razed and replaced by 2500 units of middle- and upper-middle class housing is better off than with the stadium.

At the end of the day a certain amount of "excess" for lack of a better word, is what draws people to live here. You can live within walking distance of a Metro station and a Panera in Rockville. Can't ride a bike to the ballpark with your kids, though.

by oboe on Aug 27, 2013 2:57 pm • linkreport

re: Substitution effect.

For DC, unless those are people who were going to see a movie or eat dinner in DC, these are new dollars in the District. I don't think this can be overstated enough as a benefit to DC.

by Andrew on Aug 27, 2013 3:00 pm • linkreport

"You can live within walking distance of a Metro station and a Panera in Rockville. Can't ride a bike to the ballpark with your kids, though."

You can in Arlington, though. ;)

http://bikearlingtonforum.com/showthread.php?5676-Arlington-to-Yards-Park

by M Street Denizen on Aug 27, 2013 3:04 pm • linkreport

Theo16, thanks, I fixed it.

by David C on Aug 27, 2013 3:04 pm • linkreport

I strongly support the stadium and I think it has benefited the SW Waterfront and Capitol Riverfront but if you walk around the perimeter of the stadium, especially along South Capitol Street and Potomac Avenue, it seems like a lot of the wide sidewalks and other space (i.e. the players parking lot) is unused or under-utilized. I was thinking that some of this space would be great for a weekend farmers market or other similar events.

by 202_cyclist on Aug 27, 2013 3:06 pm • linkreport

How much of the stadium expense was for awful above-ground parking garages, which if I remember correctly, MLB told the city and the Nationals they had no choice but to build?

There is no reason that I know of that these spaces can't be rented out as this neighborhood continues to develop, with shared-parking here reducing the amount of parking that should be required for new buildings.

Other than a perhaps a dozen times per year, the games are after 7 PM or on the weekends, times when most of the employees here have left.

by 202_cyclist on Aug 27, 2013 3:13 pm • linkreport

Soft stuff. Having a baseball stadium in town means I get to take my you son by bicycle to every Sunday day game during the summer and park for free at the bike valet - tip the bike minders.

I know @RL contends that the dirty pool my son loves swimming in at Yards Park would have been built anyway, but I have my doubts. Plans are plans only and sometimes they simply remain plans. As a DC resident, that is invaluable to me.

Frankly, most of the businesses being taxed by the special use tax are of DC but their customers most often are not of here. Perhaps I am being simplistic that every time I go to the ballpark, I thank some corporation or public interest group that pays DC's law firms and lobbying firms to do their bidding. That is where a good chunk of the added corporate tax is coming from, I imagine. When else do I get that direct a benefit from those evil-doers.

And I bring my own food to avoid the sales tax on the food.

That's just a fongfong-centric view.

by fongfong on Aug 27, 2013 3:22 pm • linkreport

Have the Nats started compensating Metro yet for the costs of extending service hours for late games?

by JeffB on Aug 27, 2013 3:23 pm • linkreport

I am ok with the idea of investing in sport facilities as a cultural amenity but I find the idea that they are net money generators hard to swallow in most cases. Of course new development went in around it, DC has been in a real estate boom for the past 8 years or so. The Navy Yard/SW area happened to have a good amount of large developable parcels which were ripe for building on. I really don't see any signs that it developed faster than similar areas though. In terms of some sense of nebulous local pride vs opportunity cost it's probably about a break even proposition.

by BTA on Aug 27, 2013 3:33 pm • linkreport

I think we can all agree that the Lerners and Major League Baseball picked our pockets, regardless of the financial upside to the city which is arguable at very best. Per Richard Layman, give or take a block or two in either direction, this was all in the pipeline without the stadium.

by Read Scott Martin on Aug 27, 2013 3:37 pm • linkreport

I hate to repost, but the slate article makes a very similar --but more developed--point to the one I was trying to make.
If you do a literal cost-benefit analysis of hosting the [stadium], what you'll find is that doing it doesn't make a ton of sense. After all, these are good ideas precisely because they're good ideas whether or not you [build a stadium]...But in the real world, state and local governments don't just go around making optimal infrastructure investments all the time... Real world state and local governments are constantly ignoring low-hanging infrastructure fruit for what amount to political reasons.
On top of that, Hey, look! Baseball!

by oboe on Aug 27, 2013 3:41 pm • linkreport

Per Richard Layman, give or take a block or two in either direction, this was all in the pipeline without the stadium.

Yup. Also, redevelopment of Skyland and various other parts of Wards 7 & 8 have been in the pipeline for years/decades. I suspect that one of the reasons they have not materialized, whereas Navy Yard-area plans have, is due to the 2 million (give or take a few 100k) sets of eyes on the street, disposable income in hand, that patronize the latter area over the course of half a year.

by Dizzy on Aug 27, 2013 3:59 pm • linkreport

Given the shortage of housing, its likely that residential development would have come to the area (in the wake of the NavSea and USDOT moves and the demolition of the public housing) whether other projects like Yards Park had happened or not. Just its moved to NoMa without benefit of a ballpark.

Whats imponderable is whether the demolition of the nightclubs and other less savory entertainment spots which left due to eminent domain, would have markedly slowed the residential development. NoMa has continued develop despite Fur and Ibiza (which present different issues I guess?) but would eminent domaining them for a bocce court, say, or a professional badminton facility, not accelerate development and raise property values in NoMa - which is a question quite apart from the value of badmiton or bocce as draws.

by M Street Denizen on Aug 27, 2013 4:05 pm • linkreport

1. Could you do a follow up on how that would have worked, what it would have done for folks, and what things would look like for them now that a few years have past?

The counter-factual is tough. I'm not enough of an expert on the DC budget to know what the next best use of this money is, or what impact NOT having the baseball tax would have on the economy. Anyone else?

2. The substitution effect is definitely real, but 85% of fans are non-DC residents whose dollars would primarily goto entertainment outside DC, so its impact is overstated.

It's definitely not overstated because I completely ignored the substitution effect in my analysis. I mentioned it, but then behaved as if it had zero impact - so to the extent that you agree it's real, I've understated it. Furthermore DC bars, restaurants, movie theaters and other entertainment venues probably get an outsized percentage of regional entertainment dollars. I didn't figure out what that was, but more of the 85% of entertainment spending from out of state would stay in DC than the 15% of in-state that would leave.

3. Counting the $82M for transportation improvements as a cost of the stadium isn't entirely justfied.

It's all justified, because it's all cost. It's just that SOME of the benefit goes beyond baseball. So that will show up in benefits.

4. There is a lot of unfair allocation of costs here. Money spent for environmental remediation would have been required whether a stadium or some other development was built here.

True. But would the city have paid for it? It's a cost and the city paid it. How is that unfair?

5. Does the District get ticket tax and food/drink tax revenue from other events held at Nationals Park?

I'm sure they do. And I'm confident they're counting that in their "sales tax" numbers.

by David C on Aug 27, 2013 4:10 pm • linkreport

My question is, which of you baseball fans will chip in for my new Xbox One this fall because I had to chip in for your baseball stadium? Anybody?

by Steve S. on Aug 27, 2013 4:12 pm • linkreport

My question is, which of you baseball fans will chip in for my new Xbox One this fall because I had to chip in for your baseball stadium? Anybody?

Not a baseball fan, but I'll chip in. So long as you can show that lots of silly folks will visit (and some move if you can believe it) to the city, and pay lots of taxes because they love to watch you play xbox. Heh.

by oboe on Aug 27, 2013 4:23 pm • linkreport

We don't have a streetcar system because we keeping throwing billions at stadiums and highway enlargement instead. We maxed our credit line for Nat's Park, we used our stimulus money for the new 295 ramps, we're spending almost a billion for the new Douglas bridge and the racetrack oval, and we'll swap our assets for the DCU stadium. And they'll all be tax-exempt and keep coming back for more money like Verizon does.

Certainly the new SW Safeway isn't because of Nat's Park. Nat's Park may support a few hotdog vendors on game day, that's it. Otherwise it's a huge empty dead space.

I understand places with inferiority complexes like PG county blowing wads of tax money for the imagined prestige of a sports stadium, but Washington?

In 2013 it's incredible that a few people still argue that sports stadiums are good investments in center cities. There's a finite amount of public funds and how a city allocates them speaks to where it's priorities area and progressive a place it is.

by Tom Coumaris on Aug 27, 2013 4:27 pm • linkreport

Some people will argue against a stadium regardless of the circumstances. Those folks like to think they're playing some sort of role of public defender. They'll use any sort of numbers to try to pretend that they're not making a ego driven, entertainment driven, and/or political judgement like the rest of us.

Such critics will always choose a time horizon for the return on investment that will bolster their argument against the stadium. They'll include infrastructure investments that would have been made for any sort of development in the cost of construction. They'll ignore the economic benefits of said infrastructure upgrades that wouldn't have been made without the stadium. They'll pretend that all the development in Chinatown/Capitol Riverfront/Buzzard Point would have magically happened on its own in the same time frame despite the fact that all those areas had very bad social reputations which caused a situation where nothing was happening before the stadium was completed. When all the chips are down, they'll just pretend that the city isn't getting any money at all from tickets and tax revenue from the development around the stadium.

You know what other project had similar critics? The Metro. Now, I'm not saying that a stadium has the same dramatic effects at the Metro but they also aren't as much of an investment. The key is that someone could easily make some sort of study about whether or not the Metro was "worth it." They could pull all kinds of numbers and leave other stuff out to claim that it hasn't been worth it. At the end of the day, it's worth it because our region has collectively reaffirmed over and over again that we think it's worth it.

by Cavan on Aug 27, 2013 4:28 pm • linkreport

For those who think that the ball park created all of the development:

http://greatergreaterwashington.org/post/15793/near-southeast-rebirth-started-before-the-nats-came-along/

by JohnB on Aug 27, 2013 4:28 pm • linkreport

Tom Coumaris:
"Nat's Park may support a few hotdog vendors on game day, that's it."

The owners and the people who work at Justin's, Gordon Biersch, Park Tavern, and Bluejacket (if it ever opens up) would probably disagree.

by 202_cyclist on Aug 27, 2013 4:34 pm • linkreport

JohnB, just because you posted a link doens't mean you're correct.

Dizzy, +1!

Tom Coumaris, I have a few friends who live in one of those new apartment buildings by Navy Yard who live there because of the stadium. I have others who live there because the building exists... which it didn't before the stadium.

by Cavan on Aug 27, 2013 4:36 pm • linkreport

@Tom Coumaris "In 2013 it's incredible that a few people still argue that sports stadiums are good investments in center cities.":

Where else would you put them? In auto-centric suburbs? In vacant city land surrounded by parking lots (which is basically Nats Park, but luckily they let the mixed-use developments stay rather than parking)? Near the terminus of a Metro line far away from nearly everything? I did some basic 5-minute surveying of Google Maps, and the only areas connected to transit with largely unused or underutilized land are Greenbelt and Van Dorn St (if you could suburbs as underutilized land your scope vastly broadens, but good luck with the NIMBYs). You could also argue Potomac Yard was underutilized at that time, but then you'd just be trading future DC development for future Alexandria development.

by ImThat1Guy on Aug 27, 2013 4:38 pm • linkreport

On the benefits side of the equation, you should also add most of the food and drink tax revenue sold at the Capitol Riverfront restaurants two hours before/after the games.

by 202_cyclist on Aug 27, 2013 4:39 pm • linkreport

@202, In order to do that, you'd have to take the difference between what they typically sell on non-game days from what they typically sell on game days. I live down there; Justin's, GB, and Park Tavern are far from empty when the Nats are on a road trip.

by JES on Aug 27, 2013 4:43 pm • linkreport

"They'll pretend that all the development in Chinatown/Capitol Riverfront/Buzzard Point would have magically happened on its own in the same time frame despite the fact that all those areas had very bad social reputations which caused a situation where nothing was happening before the stadium was completed."

Capital riverfront did NOT have nothing happening before the stadium was completed. It had NavSea, USDOT, several private office buildings on M Street, a hotel, a residential high rise, and an EYA townhouse development. The ballpark MAY have accelerated things (it PROBABLY did) but its not true that nothing was happening. And its virtually certain that it would have continued to develop, one way or the other.

I think reviewing costs and benefits, rather than going with the gut, a worthwile exercise. It can isolate the points of disagreement.

"Some people will argue against a stadium regardless of the circumstances. Those folks like to think they're playing some sort of role of public defender. They'll use any sort of numbers to try to pretend that they're not making a ego driven, entertainment driven, and/or political judgement like the rest of us. "

I presume you are not directing that at Dave C.

"They'll include infrastructure investments that would have been made for any sort of development in the cost of construction. "

Dave C has said he will include offsetting benefits of those investments in a later post.

I think this does show the disadvantage of trying to post seperately on costs and benefits. They are interwoven, and people may lack the patience to await the fuller discussion.

by M Street Denizen on Aug 27, 2013 4:43 pm • linkreport

To add on to my above post, if you put it in Potomac Yard, you'd need to build the station. That costs quite a bit.

by ImThat1Guy on Aug 27, 2013 4:44 pm • linkreport

@ImThat1Guy:

Good point. If we're going to count the $82M transportation costs as a cost of the stadium, then we should count the travel time savings and congestion reduction benefits of having this in a walkable, metro-accessible location as part of the benefits.

Assuming that the Nationals were going to stay in the DC area, the alternative would be several thousand more peak-period vehicles added to I-66 or the Beltway. This is an externality that everyone on those highways would pay, whether or not they are going to a game.

by 202_cyclist on Aug 27, 2013 4:45 pm • linkreport

"Where else would you put them?"

How about put them whereever they would go absent a public subsidy? Heck, if they really have negatives (as Tom thinks - I disagree) you could ALLOW them in center cities, but only if they pay a fee to offset the negative. DC and the suburban jurisdictions could STILL have a bidding war - PG where the negs would be less might charge a smaller fee. ;)

by M Street Denizen on Aug 27, 2013 4:47 pm • linkreport

"To add on to my above post, if you put it in Potomac Yard, you'd need to build the station. That costs quite a bit. "

are you guys doing the BCA from the point of view of DC, of the region, of the USA? Cause if youre doing it from the DC POV the station in Alexandria is not a cost. If youre doing it from the regional POV, than the substitution effect is major. By mixing POV's you are going to get an incorrect result.

by M Street Denizen on Aug 27, 2013 4:49 pm • linkreport

"Assuming that the Nationals were going to stay in the DC area, the alternative would be several thousand more peak-period vehicles added to I-66 or the Beltway. This is an externality that everyone on those highways would pay, whether or not they are going to a game."

thats why Fairfax county is chipping in to pay for the ballpark - oh wait, never mind.

by M Street Denizen on Aug 27, 2013 4:51 pm • linkreport

I should add that Merrifield was also underutilized in a way similar to Van Dorn (mostly old crappy office buildings and warehouses). Then of course you've got the RFK site, but knocking down a stadium and rebuilding it costs quite a bit, and I wouldn't exactly call RFK (or obviously any of my other mentioned sites) a dense, walkable, urbanist neighborhood like Navy Yard, which is another great thing about having the ballpark there instead of elsewhere. In retrospect, there's really no better location. Sure, the city was coerced into paying too much, but hindsight's 20/20. Plus, we would've paid that anyways if we put the stadium in another area, and due to MLB's terms, there certainly was going to be a new stadium. Maybe it would've been Alexandria or PG County who paid instead of the district, but it would've been paid.

by ImThat1Guy on Aug 27, 2013 4:52 pm • linkreport

"Sure, the city was coerced into paying too much, but hindsight's 20/20."

Im pretty sure there were folks who said that at the time.

" Plus, we would've paid that anyways if we put the stadium in another area, and due to MLB's terms, there certainly was going to be a new stadium. Maybe it would've been Alexandria or PG County who paid instead of the district, but it would've been paid. "

I dont think Alexandria would have paid. If no one had offered to pay like that, would MLB not have moved to the region? Maybe, maybe not. But thats a different BCA than what Dave C is presenting which is from the DC POV.

by M Street Denizen on Aug 27, 2013 4:57 pm • linkreport

"If no one had offered to pay like that, would MLB not have moved to the region?"

Exactly. And that's not good for the regional economy (or culture, for that matter).

by ImThat1Guy on Aug 27, 2013 4:59 pm • linkreport

There seems to be two separate questions here. First, do stadiums encoruage development? Second, was this stadium worth the cost?

I think the answer to the first question, clearly is yes (here is a major development planned next to Citi Field: http://www.nycedc.com/project/willets-point-development).

The answer to the second question is to be determined. Yes, $600M or $700M is a lot of money, certainly, but the stadium also isn't without financial benefits for the District. Baseball has only been played at the stadium for five years. We don't know the lifespan of the stadium, much of the development throughout the Capitol Riverfront neighborhood (let alone the SW Waterfront or South Capitol Street corridor) hasn't even begun.

by 202_cyclist on Aug 27, 2013 5:04 pm • linkreport

"Have the Nats started compensating Metro yet for the costs of extending service hours for late games?"

The Nats have never used extended Metro hours. The fee you are referring to is a *deposit* should they opt to extend hours for a given game. MLB and the Lerners don't want to front the money if a game goes late. It's really more of a PR issue than a real problem at this point. The Redskins pay the deposit and run late because it's much more common in pro football to have a scheduled game run past midnight.

by Kev29 on Aug 27, 2013 5:04 pm • linkreport

"Exactly. And that's not good for the regional economy (or culture, for that matter)."

maybe, maybe not. Certainly the substitution effect comes into play big time from the regional POV. Im not at all sure a metro economy benefits from a sports team - certainly not compared to the cost.

by M Street Denizen on Aug 27, 2013 5:07 pm • linkreport

"There seems to be two separate questions here. First, do stadiums encoruage development? Second, was this stadium worth the cost? "

No the questions are A. Did Nats Park encourage development and B. Was it worth it.

Development issues are SO specific that I dont think the impact of a ball park in another city is that helpful.

by M Street Denizen on Aug 27, 2013 5:09 pm • linkreport

Another point when doing doing cost/benefit analysis is that you need to subtract the residual value of the land. The land that Nationals Park is sitting on does not vanish. Hopefully the stadium will be here for a long time but if the team does relocate in 50 years or 75 years, that land will still have value.

by 202_cyclist on Aug 27, 2013 5:13 pm • linkreport

"We don't know the lifespan of the stadium, much of the development throughout the Capitol Riverfront neighborhood (let alone the SW Waterfront or South Capitol Street corridor) hasn't even begun."

The farther along we go, the smaller the impact likely is. Since DC is headed towards build out anyway, and the synergies of the development happening without the ballpark would be accumulating. Its in 2008 that the big impact should be sought - the time when the extra eyes on the street were really valuable. If you can't justify it with 2008 to say, 2015 development, I think the case is pretty weak.

And including SW waterfront is rather a stretch. I mean why not count in development in NoMa while you're at it? SW waterfront is a different submarket, driven by different factors.

by M Street Denizen on Aug 27, 2013 5:13 pm • linkreport

"Another point when doing doing cost/benefit analysis is that you need to subtract the residual value of the land. The land that Nationals Park is sitting on does not vanish. Hopefully the stadium will be here for a long time but if the team does relocate in 50 years or 75 years, that land will still have value. "

Discounted at 3% that won't make a big difference.

by M Street Denizen on Aug 27, 2013 5:14 pm • linkreport

The social cost of eminent domain was cited as one of the costs of the stadium. The flip-side of this is that the stadium could be seen as a form of land-banking. I have no idea what the lifespan of a new MLB stadium is but in 50 years or 75 years, if this site is redeveloped, it would be easier to do so when dealing with a single landowner and without several thousand residents living at site where Natoinals Park is.

by 202_cyclist on Aug 27, 2013 5:21 pm • linkreport

M Street Denizen:

"Discounted at 3% that won't make a big difference."

Perhaps for the stadium itself but I don't think the actual land depreciates that much.

by 202_cyclist on Aug 27, 2013 5:22 pm • linkreport

M Street Denizen:
"If you can't justify it with 2008 to say, 2015 development, I think the case is pretty weak."

If a 20-30 year period is going to be used to analyze the financing costs, then this same number of years should be used for the benefits calculations.

by 202_cyclist on Aug 27, 2013 5:24 pm • linkreport

Its in 2008 that the big impact should be sought - the time when the extra eyes on the street were really valuable. If you can't justify it with 2008 to say, 2015 development, I think the case is pretty weak.

M Street Denizen, you just made my point about how critics purposely pick time horizons that look bad. The stadium was financed by 30-year bonds. Shouldn't we be asking if the development around the stadium plus tax receipts on tickets/concessions plus the increase in land value is greater than the cost of servicing the bonds?

Now, you'll probably reply that you can't count any of the taxes from development around the stadium or the increase in land values as part of the pros of the stadium as it would have happened anyway, which again furthers my point in my previous comment.

by Cavan on Aug 27, 2013 5:26 pm • linkreport

"Perhaps for the stadium itself but I don't think the actual land depreciates that much."

I said discount rate, not depreciation rate. Those are different things.

"If a 20-30 year period is going to be used to analyze the financing costs, then this same number of years should be used for the benefits calculations."

The standard approach would be to ignore financing costs, just take the investment cost in the time when the money is actually spent, and then discount the benefit flows. DC seems to be choosing to including financing costs and then to just sum up benefits and costs without discounting - an approach often taken by amateurs. It does not accurately reflect the time value of money - that a dollar of benefit in 2013 is worth more than one in 2023.

and I am not arguing for ignoring ALL benefits in distant years. Just the development benefits. because I think the development impact of the ball park will taper off for reasons I mentioned above.

by M Street Denizen on Aug 27, 2013 5:30 pm • linkreport

"M Street Denizen, you just made my point about how critics purposely pick time horizons that look bad. The stadium was financed by 30-year bonds. Shouldn't we be asking if the development around the stadium plus tax receipts on tickets/concessions plus the increase in land value is greater than the cost of servicing the bonds?"

Thats one approach. But you should only look at development that wouldnt have happened otherwise. I can see the case that eyes on the street impacted development in 2008 and made it happen faster than otherwise. But at some point that tapers off. In my opinion at any rate.

"Now, you'll probably reply that you can't count any of the taxes from development around the stadium or the increase in land values as part of the pros of the stadium as it would have happened anyway, which again furthers my point in my previous comment."

Im not sure how you could get that from my comment, which explicity referenced the eyes on the street effect, and said that it makes more sense to count the development that happened between 2008 and 2013, but that development that will happen in the 2020s is less likely to be caused (or even accelerated) by the ball park.

by M Street Denizen on Aug 27, 2013 5:34 pm • linkreport

Here is an estimate of the tax revenue the stadium can bring. There are 81 home games per season. Assuming an average attendance of 30,000 (probably likely to be more due to regoinal population growth over three decades), this is 729M fans attending the Nats games over 30 years. Assume that every other fan spends $10 on food/drink at the stadium (i.e. one beer). This is $3.64B With the ten percent food/drink tax, this would be $364M of revenue from food/drink alone over a 30-year period. Discount this by 15% if you'd like to account for the substitution affect of DC residents.

$364M is just tax from food/drink sold at the games. It does not include revenue from other non-baseball events, tax revenue that purchases from stadium employees make at surrounding businesses, or tax revenue from purchases at neighboring restautants, bars, and businesses. This also does not include the development that would have occurred at the Capitol Riverfront neighborhood but was accelerated because of the stadium. This also doesn't account for any increased property values as a result of the transportation improvements, streetscape improvements, and public safety improvements from the stadium.

Depending on the time period you use, it is not at all clear that the stadium was a bad investment for DC.

by 202_cyclist on Aug 27, 2013 5:45 pm • linkreport

I agree that stadium deals do tend to move things along faster compared to some other sorts of development. Then again, such deals are characterized by the entire city government, business leaders working hard on a single project, vast eminent domain, and throwing several hundred million dollar at it. We saw the same thing with Metro, for example, and it seems to have been a good investment.

But is the baseball stadium a similarly good investment?

What bothers me is people here are comparing the stadium to other sorts of economic development of distressed areas,where there is no unified government action, and no huge injection of money.

People are also looking at the benefits, but forgetting that sports teams up and leave, and the city is left holding the bag. If the city invests in a road or Metro, its not as if all the users would suddenly depart. But giving so much money to one entity is extremely risky.

by SJE on Aug 27, 2013 6:18 pm • linkreport

Don't forget the impact of BRAC and the two wars. BRAC bought Navy jobs and contractors to the Navy Yard area from VA and other places and the wars made defense contracting a major growth industry.

KBR (as an example) didn't move to the Navy Yard area because of baseball. They moved because of BRAC and their move was financed by the wars.

Don't believe me? Check out all the defense contractors with offices among the strip malls along Three Notch Road in Patuxent River, MD. They didn't move there for the amenities, they moved there for the Naval Air Station business.

by dcdriver on Aug 27, 2013 6:19 pm • linkreport

No discussion of this stadium is complete without a focus upon the entities behind it-

http://wwwsouthcapitolstreet.blogspot.com/2008/09/why-wasnt-public-informed-mlb-covington_06.html

by Douglas Andrew Willinger on Aug 27, 2013 6:50 pm • linkreport

How much development has FedEx Field brought to Landover ? That's about how much development Nat's Park is responsible for.

by Tom Coumaris on Aug 27, 2013 7:03 pm • linkreport

@Tom Coumaris:
Apples to oranges. One is a monolith surrounded by a sea of parking out in the suburbs, the other is a good urban stadium with associated development.

by ImThat1Guy on Aug 27, 2013 8:07 pm • linkreport

I think it is ridiculous that taxpayers have to underwrite toys for billionaires, but this posting did a nice job of completely glossing over the fact that the "ballpark fee", a tax agreed to by the cities largest businesses has produced a surplus for the city 8 of the last 9 years, collecting ~160 million more thus far to service the stadiums bonds. As it looks right now, the yearly surplus will allow the city to payoff the stadium at least a decade early.

I know, I get it. We should have spent the money feeding the poor or building new schools. The problem is the money only exists because of the ballpark. Anyone who can get the Districts largest businesses to agree to a specific tax to fund ~500 million in homeless shelter construction, have at it. I wish you luck.

And to those who think the ballpark area would be were it is today anyway, or "eventually", I would say prove it. When the first shovel went into the ground for the stadium, this city was in its 7th year of the largest and richest economic boom since the second WW. According to the DC development report, there had beed nearly 45 billion in provate development within the District proper from 1999 to 2006, and yet none of it had occurred prior to the District agreeing to put the stadium there.

by Ballpark on Aug 27, 2013 8:27 pm • linkreport

Tom Coumaris, your comment comparing Nats Park to FedEx Field either proves my point that people who oppose all stadiums would never stop criticizing a stadium even if it generates enough money to rebuild all schools, libraries, parks, roads, and every other public amenity within 30 seconds of it opening.

That comment was in bad faith and you know it. FedEx Field was built in the mid 1990's, before we as a society started to re-learn now to build urban places. The only urban stadium built between WWII and the Verizon Center was Camden Yards. Even that stadium is clearly a transition as it was built with many acres of surface parking because nobody would do otherwise in 1992.

You know it's the parking lots and not the stadium itself that causes FedEx to be a nearly incurable car dependent place.

If you need guidance on the difference between an urban stadium and a car-dependent one, please refer to my 2009 post, which I will paste the link to at the end of this comment. My piece was used as a source for a Master's thesis in urban planning back in 2010 in case you want to say that content that is now part of the accepted knowledge of this site is wrong.

http://greatergreaterwashington.org/post/1700/how-to-create-a-successful-urban-stadium/

by Cavan on Aug 27, 2013 8:43 pm • linkreport

Comparing the Buzzard Point deal with the Nationals stadium deal is crazy. The Buzzard Point stadium deal has nothing near the amount of subsidies the National Stadium did

by tk421 on Aug 27, 2013 8:50 pm • linkreport

Dizzy -- M St. SE vs. Skyland, jesus, are you serious? Go out to Good Hope Road some day and look around. Better yet, cycle the triangle of MLK Ave., Alabama Ave., and Good Hope Road and then assess the economic opportunity present at that location.

M St. SE is basically part of Capitol Hill. Houses on Capitol Hill, many go for $1 million + now.

Same with M St. SW and its proximity to Downtown.

Completely different situations.

Remember that JDLand was one of the first blogs in the city focused on DC development issues. It started around 2001? It was focused on new development in SE-SW. Again, all that stuff was in the pipeline. Although I do agree that probably some of the housing in terms of timing-phasing was probably influenced by the stadium.

by Richard Layman on Aug 27, 2013 8:54 pm • linkreport

Tom C. -- re the earlier comments about Wrigley Field, Wrigleyville is cooler than it would be if it didn't have the stadium. How much that matters economically is a different story.

I quote a lot from the book _It's Hardly Sporting_ about how night baseball changed the nature of the Wrigleyville commercial district. And obviously, all the stuff that has been going on wrt the team's planned changes is relevant to that broader issue.

I think it's better to have stadiums and arenas in center cities. I just wish Congress would step in and make it illegal or put very serious limits on how much localities can contribute to stadiums/teams. Without such a stricture, teams will always hold cities hostage.

As I wrote here probably and in my own blog, I think that localities providing stadiums/arenas should get a form of preferred stock that pays out when the team is sold. After all, a good deal of the appreciation value of a sports team comes from their sweetheart real estate deals.

by Richard Layman on Aug 27, 2013 8:59 pm • linkreport

Before the stadium, the market didn't view Navy Yard as part of Capitol Hill. The place was blighted and seedy. There may have been plans for the place back in 2001 but there sure as heck weren't any groundbreaking until the stadium was inked.

by Cavan on Aug 27, 2013 9:05 pm • linkreport

Cavan -- is any football stadium a net positive to cities? The person saying the comparison to FedEx Field is a put up job is sorta right. With those big parking lots, and as people have mentioned here and in my blog, tailgating is so much a part of the experience, + the fact that there are so few events, the stadiums are just albatrosses. I know in Atlanta, Baltimore, Seattle, and Philadelphia, the football stadiums are not strengthening urbanism. Cleveland's is located in a manner which didn't encourage connection to the Downtown.

I haven't been to Detroit since Ford Field was constructed. That's tricky, because it's next to a baseball stadium (a parking lot for the Tiger stadium is partly constructed on my father's old dentist office). But mostly football stadiums sit empty.

So I'd say, try to keep baseball, basketball, hockey event locations stay in the cities because they can be leveraged to support urbanism. Keep the football stadiums in the suburbs and let them deal with the walkability-killing nature of those structures.

by Richard Layman on Aug 27, 2013 9:08 pm • linkreport

Cavan -- you're wrong about "the market" and Capitol Hill and M St. SE. At least if you're referring to the real estate industry. It was only as the stadium came together that an effort to rebrand that area as "Capitol Riverfront" occurred, and the director of the DC Marketing Center jumped ship to run that nascent Business Improvement District.

Before the stadium, the Capitol Hill BID planned to expand to that area, as development hit critical mass. As it is, that area considers 8th St. SE, decidedly Capitol Hill, part of its neighborhood.

by Richard Layman on Aug 27, 2013 9:12 pm • linkreport

cf. also the Anacostia Waterfront Development Corp. plan and marketing materials.

by Richard Layman on Aug 27, 2013 9:12 pm • linkreport

@Cavan

Some people... will use any sort of numbers to try to pretend that they're not making a ego driven, entertainment driven, and/or political judgement like the rest of us.

OK. Yes. Some people will lie. I don't see how that's relevant unless you think I'm lying. Do you have a substantive critique of the numbers I've presented?

Before the stadium, the market didn't view Navy Yard as part of Capitol Hill. The place was blighted and seedy. There may have been plans for the place back in 2001 but there sure as heck weren't any groundbreaking until the stadium was inked.

In 2002, two large office buildings on M Street opened and 4,100 NAVSEA employees started work at new buildings at the Navy Yard. In 2003 the Federal Gateway building opened and the next year the Marine Barracks.

Maritime Plaza opened its two office buildings in 2001 and 2003.

So did you mean that other than those 7-8 buildings, there weren't any groundbreakings?

by David C on Aug 27, 2013 9:48 pm • linkreport

@202_cyclist

If we're going to count the $82M transportation costs as a cost of the stadium, then we should count the travel time savings and congestion reduction benefits of having this in a walkable, metro-accessible location as part of the benefits.

No. No we should not. That's like saying if you add a 4 foot deep pool in your back yard you should count as a benefit all the water you don't have to pay for because you didn't build a deeper pool.

Here is an estimate of the tax revenue the stadium can bring.

We don't need an estimate. We know how much money the stadium is bringing in. And the $364 million you estimate - which is higher than what we've seen - would cover about 1/3 of the cost of the stadium bonds.

by David C on Aug 27, 2013 9:52 pm • linkreport

I think that having the Nationals Stadium was well worth it. As others have commented the area was very much a seedy wasteland with really raunchy gay and other adult-themed clubs. Bringing in the stadium has attracted other development that would otherwise have not been there.

As for FedEx Field the reason why it has not attracted more development to PG County is because it is not public transportation friendly. It is possible to walk there from the Blue Line, but it's still pretty far away. The location isn't conducive to development due to the lack of adequate public transportation. For whatever reason, when Montgomery County developed Ride-On and strongly supported Metro, PG County chose not to. There are no real connections to any other shopping center, save for the defunct Landover Mall.

So, on balance, I think that the Nationals Stadium was worth it for the city. It did improve the neighborhood and bring development. And without the stadium, despite what other people say, the area would still probably be a wasteland today.

by Rain17 on Aug 27, 2013 9:58 pm • linkreport

Baseball is the national pastime. It is our urban history in America. Baseball and its ballparks are part of our urban fabric. As a DC native and resident I'm glad my city went to the trouble to make sure we had it again. And I don't care necessarily that the money works out exactly in the taxpayers favor. Life is more than a balance sheet. Baseball parks are what we do in cities. Major league cities anyway. Lets just celebrate that we have a wonderful ballpark and move on to the next project. Building a home for the DC United.

by Chris Hamilton on Aug 27, 2013 9:59 pm • linkreport

"And there are huge opportunity costs in the loss of the ability to release more debt (not unlike how Maryland mortgaged its highway transportation funds on the ICC, and to do anything else, they had to increase state taxes on gasoline, to get out of the hole). I know e.g., it costs us the opportunity to get city funds to acquire the Takoma Theatre in my neighborhood."

Who really cares about the Takoma Theatre? I live not too far from it and would rather go to Nats games than to watch a play there. Anyway I think there are plans to turn it into a condo or some other development, which I think is a great idea because it will attract more residents with better incomes. What I would like to see in my neighborhood, especially on 4th Street, are better restaurants and more upscale businesses.

by Rain17 on Aug 27, 2013 10:00 pm • linkreport

DC seems to be choosing to including financing costs and then to just sum up benefits and costs without discounting

Sort of. I could have thrown all the numbers into a spreadsheet and calculated the Net Present Value, but I was trying to keep it simple. So I haven't counted the time value of money, that's true. But since I'm reporting prices that were in 2006-2012 dollars, if I brought it all into 2013 it would bring the total price up. And I'm not including future interest so that doesn't hurt me either.

The important numbers out of this are:

$135 million to build the stadium upfront
$82.6 million for stadium-related transportation upgrades
$24-32 million a year for 6 years to pay off the remaining debt and maintain the stadium

All of these numbers would be larger because they're in the past. A fourth relevant number is that we still owe $507 million as of 2012. So that's already in present value. Which means that in 2013 dollars we've paid or promised more than $860 million.

by David C on Aug 27, 2013 10:08 pm • linkreport

but this posting did a nice job of completely glossing over the fact that the "ballpark fee"

I didn't gloss over it. I just thought that taxing District Hardware for its use of electricity didn't really count as a benefit of the ballpark. If your point is that the ballpark was a trojan horse that let allowed the DC council to initiate a tax they supported anyway, then my response is that we can do better. The stadium costs that are covered by taxpayers then becomes a tax on cowardice (money we have to pay because the DC Council is scared to do what it should anyway). That's hardly something to celebrate.

by David C on Aug 27, 2013 10:17 pm • linkreport

Richard - Atlanta actually has a pretty good urban football stadium - the Georgia Dome, with connections to the GWCC, Philips Arena, CNN Center etc. Together these facilities bring in millions of people annually to the stadium area in downtown Atlanta - far better than Nationals Park can claim, and at half the cost to build after accounting for inflation. The Dome also handles many events besides NFL including college football games, monster truck rallies, wrestlemania, etc.

by Scoot on Aug 27, 2013 10:22 pm • linkreport

A few people have brought up Wrigley Field.

Wrigley Field is exceptional. It'll be 100 years old in April and was not publicly financed. Both of these things are way outside the norm. Only Fenway is older. After that, I think Lambeau field, built in the 50's, is next oldest.

In addition it's an icon of the city, how many other stadiums can really say that. And, because it's one of the last of the old stadiums, it's a tourist draw in its own right. So yeah, if we can recreate that then it may be worth it. Then we should recreate the Bourbon Street entertainment district and the Rodeo Drive shopping district, because that stuff is easy.

But if we ignore Wrigley (and Fenway), because we aren't building 100 year old stadiums, what is your next best example? What is your 10th best? It starts to drop off quickly.

by David C on Aug 27, 2013 10:29 pm • linkreport

@Rain17:
As for FedEx Field the reason why it has not attracted more development to PG County is because it is not public transportation friendly.
I think that is at best a secondary reason. The primary reason would be that there are very few events in FedEx Field. There are eight regular season games plus a couple preseason games, and at best a couple of postseason games. There could theoretically be concerts there, but since it's so big I think there are only a few each year.

It's hard for something to catalyze development when it's empty almost all of the time. Yes, it's also a pain to get there, but that's not such a bad thing since so little happens there.

by Gray on Aug 27, 2013 10:32 pm • linkreport

AT&T Park is probably the best recent example of how not to get totally screwed on a baseball stadium. Most of what the city paid for was transit improvements with value beyond just baseball.

Nats park was a bad deal because the team and the owners sacrificed nothing. What incentive does the team have to stay here if they have no sunk costs?

by MLD on Aug 27, 2013 10:53 pm • linkreport

Richard, JD Land got started in late 2003 (Oct, 13) , not 2001.

David C, lets not be hyperbolic for effect shall we. It is a tax on DCs largest businesses, the dreaded law firms among them, all the businesses voluntarily entered into an agreement via the chamber of commerce with the city council to have a special tax levied against themselves.

As far as paying for civic works goes, it is about as close as one gets to not having to underwrite it at all, and the fact that it is producing ~ 25 million a year in surplus that the city has been funneling to the general fund is pretty significant since that money goes to pay for thing near and dear to GGWers hearts.

by Ballpark on Aug 27, 2013 10:58 pm • linkreport

@Richard Layman

I brought up Skyland & those areas not to compare them in terms of development potential to Navy Yard, but to make the point that having projects "in the pipeline" is no guarantee of their coming to fruition. There are multiple reasons why that might or might not happen, but one should not dismiss the impact of any particular one (and I certainly don't think you do) by saying that the situations are different. All situations are different. NoMa would've developed w/o the new federal offices or the Metro station there too - doesn't mean they didn't play a catalyzing role.

@David C

Do you have some sort of metric for 'iconicness' or what you mean by 'best' when you say "10th best" and "it" - whatever 'it' is - "starts to drop off quickly? FWIW, this season, Nats' attendance is 11th in the league, right between Fenway (#10) and Wrigley (#12). So whatever 'it' is that those places have, Nats Stadium can't be completely lacking.

by Dizzy on Aug 27, 2013 10:58 pm • linkreport

@Scoot:
And Atlanta (well the State of Georgia) is going to replace the Georgia Dome with a new one much farther away from the subway, because the Falcons can't stand to play another game in a stadium from ... the 90s. [shudder]

by Matt Johnson on Aug 27, 2013 10:59 pm • linkreport

I strongly disagree that the Capitol Riverfront was considered an extension of Capitol Hill, except until only recently-- and even now, I think they are largely distinct neighborhoods. The Capitol Riverfront neighborhood was the pretty rough even in 2006-2007. One of my friends bought the first EYA homes and there was almost more tumbleweed than people back then.

by 202_cyclist on Aug 27, 2013 11:04 pm • linkreport

@David C:

Why isn't a longer 20-25 year time period used for a cost/benefit analysis of the Nationals stadium. 20-25 years is often used for large infrastructure projects. To evaluate if they are cost-beneficial.

by 202_cyclist on Aug 27, 2013 11:13 pm • linkreport

It is a tax on DCs largest businesses

That's one tax. There's also the utility tax which is on all businesses. If you want to count the $25 million surplus, you have to include that. And that taxes everyone from the biggest lawfirm to the little bitty pretzel company on Capitol Hill.

And I doubt every business agreed to the taxes (which is a totally unfair tax because it's on revenue not profit) and they certainly didn't agree to have their tax funneled into other spending.

But if being able to pass a tax for one pretty clearly stated purpose and using it to pay for another is a benefit, then that's embarrassing. The honest thing to do would be to pay down the debt as fast as possible.

by David C on Aug 27, 2013 11:15 pm • linkreport

what you mean by 'best' when you say "10th best" and "it" - whatever 'it' is - "starts to drop off quickly?

I mean Wrigley is held out as an example of how to do a stadium right and of the promise of a stadium. If you were to rank the best urban designed stadiums, what would be 10th best. I suspect the quality of the urban design drops pretty quickly from Wrigley and Fenway to other stadiums.

by David C on Aug 27, 2013 11:19 pm • linkreport

Why isn't a longer 20-25 year time period used for a cost/benefit analysis of the Nationals stadium.

Because then I have to pull in numbers from the future and my freaking time machine is always in the shop - stupid flux capacitor.

If you have reason to believe that revenue from the baseball sales tax is going to dramatically increase (rent won't) then I'd like to hear that argument. But future costs (maintenance and debt) are kind of fixed and so is the rent. So I expect the future to look very much like the present.

by David C on Aug 27, 2013 11:22 pm • linkreport

Georgia Dome brings people to the facility, but it can be packed for a game or the neighboring convention center (one of the largest in the country) can be packed with meetings and the area still seems dead. There is a lack of restaurants downtown despite a few token eateries near Centennial Park.

The football stadium in Cleveland was built on the site of the old c. 1929 multi-purpose stadium (which my grandfather once managed). It's adjacent to the rock hall of fame, a science center, and some other lakefront attractions and is walkable to the old warehouse district adjacent to downtown. It's nowhere near as isolated as old Tiger Stadium or that stadium's replacements. It's not as integrated into downtown as the baseball stadium, but it's not totally disconnected either. It's a better model than say, Soldier Field.

Without the Nationals, DC did have a baseball team, but it was in Baltimore and people had no trouble going there, especially the many transplants from American League cities. The Senators (both iterations) were among the worst teams of all time and the idea of DC as a baseball town is, at best, amusing. The era in which cities felt compelled to have a full complement of sports teams ended about 15-20 years ago. I suspect the lack of payoff for large complexes was part of it. The continuing interest in stadiums seems to do more with skyboxes availability than with anything else.

I'll be curious to see how the benefits for the baseball stadium are priced-out.

by Rich on Aug 27, 2013 11:30 pm • linkreport

David C:

"If you have reason to believe that revenue from the baseball sales tax is going to dramatically increase (rent won't) then I'd like to hear that argument. But future costs (maintenance and debt) are kind of fixed and so is the rent. So I expect the future to look very much like the present."

The sum of the tax receipts from the stadium are cumulative (Year 1 + Year 2 + Year 3.....). As the DC region's population grows, you can also expect that concessions taxes willl increase as well. Similarly, more businesses will open next to the stadium and serve a Nationals-focused clientele (i.e. Bluejacket, etc). It is an incomplete picture now. Additionally, the stadium already has 2.3 million attendees. You said above that there is a dollar per ticket tax on any ticket sales above 2.5 million. I would expect the District will start to collect this as the size of the Nationals market increases.

by 202_cyclist on Aug 27, 2013 11:37 pm • linkreport

We are fortunate to live in a region that is growing. There will be more stadium food/drink taxes and ticket taxes when the DC metro region has 6 million people or 7 million people, than with its current population of 5.5 million people. This suggests using a longer timeframe for the costs-benefit analysis.

The bond repayment schedule is also over several years. Matching the benefit stream to the financing period also is usually sound cost/benefit practice.

Finally, the stadium is likely going to last 30-50 years. Your cost/benefit analysis should reflect this and not erected that all of the benefits will have been Alize's in the first five years after the stadium was completed.

by 202_cyclist on Aug 27, 2013 11:42 pm • linkreport

*not pretend all of the benefits will have been realized....

by 202_cyclist on Aug 27, 2013 11:44 pm • linkreport

Gray, I think FedEx Field has had at least a few concerts and Shamrock Fest each year. I think there are events that go on there in the off-season.

by Rain17 on Aug 27, 2013 11:55 pm • linkreport

I'm not sure greater attendance or greater revenue is necessarily a given. The Expos attendance never grew.

by David C on Aug 28, 2013 12:32 am • linkreport

@Matt

I think there are so many contributing reasons for why there are fewer restaurants around the Dome, and I think most of them have little to do with the Dome itself or its connection with the rest of the urban area.

A lot of it has to do with the neighborhood which has (or had for the 5 years I was there) the reputation as a seedy area where "you just don't go". Centennial Park at night? You were practically asking to get mugged, stabbed or shot.

Some of it probably has to do with downtown's very low resident population density that can't support a ton of restaurants other than lunch places and food courts.

And then there is the fact that people in Atlanta generally do not like being pedestrians - whether at the Dome or elsewhere. The area has the potential to be a better urban space but the city has a love affair with cars which dampens the outcome for lot of very good urban development, to say nothing of the halfway-decent kind.

by Scoot on Aug 28, 2013 12:49 am • linkreport

Georgia, especially the exurban and suburban Atlanta politicians, has always been hostile to public transportation, especially rail-based transportation. After all both Cobb and Gwinnett Counties have constantly voted to reject MARTA, of which locals refer to it as "Moving Africans Rapidly through Atlanta", every time it has come up for a vote, although it the margin of opposition has been steadily falling. In the last vote I think the "no position" won with around 52-53%.

Georgia remains hostile to any form of public transportation. The exurbs and suburbs are home to some of the most anti-rail legislators. They are against anything beyond widening highways. And even though Atlanta traffic problems continue to worsen they will not do anything else.

by Rain17 on Aug 28, 2013 1:35 am • linkreport

@Rich

The Orioles are Baltimore's team. While I enjoyed many trips to both Memorial Stadium and OPACY, the increase in rush hour traffic and cuts in MARC trains made attending games increasingly difficult. Combined with the current ownership regime, which stripped the team of much of its historic luster made the timeliness of the Nationals all the better.

DC is actually a baseball town. It just had the bad luck of first a racist owner (Twins) and then a crappy owner (Rangers). Despite fielding awful teams for the better part of 20 years, attendance at games in DC were not bad. Combined with the college, little league, summer league and minor leagues throughout the region, we have it pretty good.

by Andrew on Aug 28, 2013 7:39 am • linkreport

@Rain17: Which is exactly what I said. There are a few concerts a year. It's still not in use for more than 20 days a year, leaving 345+ empty days with a vacant hole in the neighborhood. Not a good way to catalyze anything.

by Gray on Aug 28, 2013 7:41 am • linkreport

@Scoot:
I think you're responding to Rich, not to me. I didn't say anything about restaurants, only that the State of Georgia wants to replace the Dome because it's "old".

As for pedestrians in Georgia, be careful. Georgians don't a have a predilection for not walking, they have inherited a built environment that is hostile to walking. When the movie theater at Atlantic Station opened, Georgians would drive 30 miles in so that they could have the experience of walking through an urban environment to get to the theater. I suspect that still happens.

The real problem with the lack of pedestrianism in the "Gulch" area, which is where the Georgia Dome, Philips Arena, CNN Center, and the Georgia World Congress Center are located, is the block structure. These massive structures actually cut off the West Side from Downtown. Only a few streets go through, and the grid is at different levels. It's really a no-mans land. The blank walls of the stadia don't help.

It also doesn't help that there is very little retail in Downtown. However, if you compare it to Midtown (centered on 10th and Peachtree) there's plenty of pedestrianism.

@Rain17:
There is certainly an anti-rail bias in Georgia. One of the biggest issues, through, is not the suburban legislators, it's the rural ones. There's a strange philosophy in rural Georgia that anything that helps an urban area will hurt the rest of the state.

What's good for the goose is bad for the gander, you know. I'm not certain that there's a racial element to this philosophy, but I strongly suspect it plays a role.

At any rate, to be clear, MARTA is limited by state law to 5 counties: Fulton, Dekalb, Cobb, Gwinnett, and Clayton.

In order for MARTA to operate in these counties, two things must happen. First, the voters in each of these counties must pass approve the MARTA Act in a referendum. Fulton, DeKalb, Gwinnett, and Clayton did this in a vote in 1965. This grants those 4 counties seats on the MARTA Board and allows the agency to plan for transit there.

Second, the voters must approve a funding mechanism before MARTA can begin operations in their county.

In 1968, the voters in Fulton and DeKalb were asked to join the system by approving a property tax levy. This failed.

In 1971, the voters in Fulton, DeKalb, Gwinnett, and Clayton were asked to join the system by approving a penny sales tax. In order for the funding measure to be approved, it had to pass in Fulton and DeKalb. If it failed in either, it would be considered failed altogether.

Clayton and Gwinnett were each getting exactly 1 rail station. It wasn't exactly the best deal for them. You can perhaps argue that it was an anti-rail bias, or a racist bias. But one of the big factors was that they were paying to get a tiny slice of the system.

Clayton was asked again in 1977. That vote failed.

Gwinnett was asked again in 1993. That vote failed.

No one has been asked to join MARTA since 1993.

A regional TSPLOST went to the voters last July. This would not have expanded MARTA to new counties, but it would have provided funding for some additional transit, including money to study a light rail extension into Gwinnett and money to restart Clayton County's bus service.

It would have also spent a lot of money on more roads, which, by all accounts, Georgians just love.

But the TSPLOST failed. Badly. 63% voted NO.

However, the TSPLOST vote was really more a victim of the TEA party, general distrust of government, and lack of an effective support campaign than it was about a referendum on transit.

by Matt Johnson on Aug 28, 2013 7:41 am • linkreport

Yes, and when do we get our Thunderdome in NE?

by NE John on Aug 28, 2013 7:50 am • linkreport

@David C

I mean Wrigley is held out as an example of how to do a stadium right and of the promise of a stadium. If you were to rank the best urban designed stadiums, what would be 10th best. I suspect the quality of the urban design drops pretty quickly from Wrigley and Fenway to other stadiums.

I think the time scale here makes it apples to oranges. Not only were Wrigley and Fenway built in different eras, but they have had a century for the urban fabric to grow and evolve around them. Nats Park is actually fairly uniquely well-positioned for something similar, given the low levels of existing development around the stadium. It won't be as charming as Wrigleyville (which I visited for the first time this summer) because we don't build townhouses like that anymore, certainly not in a central area that would command tall hotels or apartments instead. But it could mesh in quite nicely as new things go up around it, especially if it is well-utilized (e.g. those community spaces included in the stadium).

I don't want to go through stadium-by-stadium, but I think the fact that there are more poorly-integrated stadiums than not speaks to poor design and integration during the building era, rather than to some general notion that modern baseball stadiums are inherently anti-urban. Football is tougher, given the large footprint, but as urban areas continue to expand, the marginal cost of having a couple of urban blocks taken up by a stadium are reduced by overall increases in density. I found CenturyLink in Seattle to be pretty well integrated, actually, and the Superdome does about as good of a job as you're going to get in New Orleans.

We also shouldn't forget that teams do employ hundreds of people, many of whom work in the offices inside the stadium year-round.

I won't dispute Matt's mastery of Atlanta transportation knowledge, but my experiences attending the 2007 Final Four in Atlanta without a car align with what Rain17 was saying.

by Dizzy on Aug 28, 2013 8:18 am • linkreport

Without the Nationals, DC did have a baseball team, but it was in Baltimore and people had no trouble going there, especially the many transplants from American League cities.

No trouble, except for the fact that they play in Baltimore. Last time I checked, that's not DC. And last time I checked, both Nats Park and RFK are a lot closer to most DC-area residents than Baltimore is.

The Senators (both iterations) were among the worst teams of all time and the idea of DC as a baseball town is, at best, amusing.

The Cubs are terrible, too. The White Sox not much better. Yet, Chicago is definitely as baseball town. A divided town, but definitely a baseball town.

The era in which cities felt compelled to have a full complement of sports teams ended about 15-20 years ago.

Huh? Probably because in that time, you finally had the last fall out of team relocation and league expansion. You haven't seen a great deal of sports teams move in the last 15 years because there's not a lot of good places to go. That has little to do with which cities are 'compelled' to host pro sports, but a great deal to do with which markets actually can support those teams.

The DC area was by far the single largest un-tapped market for MLB to consider when the Expos were available.

I suspect the lack of payoff for large complexes was part of it.

Huh? Even if teams haven't been moving, there's been a tremendous building boom of new stadiums. The primary result has been to demolish old mutli-purpose stadiums and replace them with ones specific to their respective sports.

The continuing interest in stadiums seems to do more with skyboxes availability than with anything else.

This shouldn't be a surprise. A place like RFK is economically obsolete.

But there's more to it than that. Wrigley and Fenway survived as baseball stadiums because they were built as baseball stadiums. Others have been rebuilt because they were never great places to watch a game in the first place.

Also, if you want to look for old stadiums that are still around, don't restrict yourself to pro sports - there are a ton of great old College Football stadiums that have been standing for decades, incrementally modified and renovated to keep up with the Joneses.

by Alex B. on Aug 28, 2013 9:16 am • linkreport

"And without the stadium, despite what other people say, the area would still probably be a wasteland today."

One more time, it was already not a wasteland in 2007. I have no doubt that the ballpark accelerated redevelopment (if only because the nightclubs.etc were a negative to the new development and probablycould not have been removed without eminent domain) but the area was already developing, and would have continued to develop. The interesting thing to me, is to try to get a better sense of just how much the ballpark did accelerate that development. I think thats getting lost in the debate over tax revenue that shouldn't count, the iconic status of baseball, confusion between the the district and regional viewpoints, and the confusion about time periods and discounting (Dave C- thanks for clarifying - thats what I thought you were doing, and its not a bad approach for back of the envelope analysis - but as the discussion here shows, this may be too emotional for that approach and a more conventional one, with full spreadsheet and NPV may be called for)

by M Street Denizen on Aug 28, 2013 9:21 am • linkreport

"It's nowhere near as isolated as old Tiger Stadium or that stadium's replacements."

Comerica Park is isolated? News to me.

by 20011 on Aug 28, 2013 10:14 am • linkreport

Rain17 writes: What I would like to see in my neighborhood, especially on 4th Street, are better restaurants and more upscale businesses.

That's awesome.

How do you think you are going to attract enough customers to this area without a compelling anchor to bring people there? And why, back in the day, when the theater was a primary entertainment asset (of course people had fewer options then) with frequent attendance do you think that it was possible to support restaurants and retail in that area?

There isn't enough population density and the demographics of consumer behavior with regard to retail purchasing and eating meals out to support what you want.

Funny thing, I wrote a long email in 2002 as part of H St. Main St. in response to a presentation as part of the H St. plan which made the point that patrons to theaters like the Atlas would support the provision of restaurants, which needing business every night, wouldn't be able to solely rely on the demographics of the neighborhood only in order to support their business. (I reprinted it in my blog,

Also, all neighborhoods need destination and marketing plans, even if their retail trade areas are mostly in-city and don't involve other consumer segments.

As I point out to the people who fight the addition of multiunit housing to Takoma and the Georgia Avenue corridor at the same they lament inadequate retail, I say "why do you think there isn't the retail you want? Not enough residents, residents are also customers. If you want more retail you need more residents."

by Richard Layman on Aug 28, 2013 10:18 am • linkreport

I am awaiting the benefits analysis but it seems like a one-sided analysis and calculation if you include all of the costs but only look at the tax revenue from 2008-2013 and not try to estimate this in the years going forward. This is especially true if the Nationals are going to be using this stadium for many years to come. You've already listed maintenance as a cost separately, so that would account for stadium depreciation.

To determine if public funding was a good policy decision, you should look at all of the sales, food/drink, and ticket tax revenue the stadium will collect over its useful life.

by 202_cyclist on Aug 28, 2013 10:23 am • linkreport

Scoot, Ballpark -- thanks for corrections.

Dizzy -- pipeline in terms of really having projects moving forward (like the projects along M St. SE or M St. SW) versus the insane pipe dreams of Skyland aren't really comparable.

It's the same point I just made wrt Takoma. To build that kind of shopping center on Good Hope Road, when you already have two supermarket anchored strip centers each within one mile of that location, given the consumer demographics of that area, was insane. It's a bad bad idea, better to direct those investments to making the Congress Heights Shopping Center and Good Hope Marketplace much much stronger, than to create another center, and make those other ones worse.

Obviously, the Takoma/Georgia Ave. situations are different, but similar kinds of calculus are in play.

I guess

by Richard Layman on Aug 28, 2013 10:23 am • linkreport

202_cyclist: wrt our continued sparring over Capitol Riverfront vs. Capitol Hill. Yes, the residential elements of the respective neighborhoods were not coming together necessary. Before, with the Arthur Capper dwellings why would they? But the rebuild for that project was long underway before 2000 (I worked that area during the 2000 Census and already major buildings were fully closed, buildings that had housed a few thousand people).

But you have to look at both the residential and commercial sectors separately and simultaneously. Regardless of what you or I thought as "residents," developers mostly thought of it as one "submarket", Capitol Hill.

I think it's fair to say that with the continued relocation of Navy agencies to the Navy Yard, plus US DOT, over time as a real estate submarket, it would have been broken off separately in terms of the commercial sector.

But up to the freeway, even the Riverfront, has been considered part of the Capitol Hill Restoration Society's broader "interest area" which outspans the formal boundaries of the Capitol Hill Historic District.

And wrt the Capitol Hill BID's plans to expand to that area, I am referencing a probably 2001 conversation I had with George Didden (now deceased) about the BID's plans generally and in the future, because we were talking to him wrt H Street and whether or not we could be part of a BID. (Similarly to how I described the creation of the Capitol Riverfront scotching some of the Capitol Hill BID's plans, the same happened with the NOMA BID along 2nd St. NE.)

SO obviously, back then, the movers and shakers considered it one market, at least in terms of commercial real estate.

by Richard Layman on Aug 28, 2013 10:33 am • linkreport

Or they considered it as a potential expansion area just like the dotted lines on the 1968 WMATA adopted regional plan; something that might be nice to happen but no substantive action to do such a thing was acutally happening.

by Cavan on Aug 28, 2013 10:42 am • linkreport

Cavan

I'm curious. Did you actually walk on M Street Southeast at any time between 2006 and 2008? Because I did, almost every weekday, and I get the impression you don't really know what it was like here then.

by MStreetDenizen on Aug 28, 2013 10:47 am • linkreport

@202_cyclist
To determine if public funding was a good policy decision, you should look at all of the sales, food/drink, and ticket tax revenue the stadium will collect over its useful life.

The analysis does. The per-year cost of the stadium is the debt service and maintenance minus the yearly tax revenue. Is there a reason to think the tax revenue might dramatically increase?

by MLD on Aug 28, 2013 10:48 am • linkreport

Yes, but not every day.

But to get at your larger point, the ballpark was inked in 2004. Much of the development in 2006 was the first of the ballpark related stuff. It would have taken some amount of time to get funding and approval to break ground after the development community learned where the new ballpark was to be located.

by Cavan on Aug 28, 2013 10:49 am • linkreport

@MLD:

As I noted above, impact of the tax revenue the stadium generates is cumulative (Year 1 + Year 2 + Year 3....).

I am unaware of recent attendance trends for Major League Baseball games but I would assume that attendance would rise along with population growth. When there are 6.5 million or 7 million residents in the DC metro area, it isn't unreasonable to assume that attendance will be greater than when there is 5.5 million residents in the DC region.

Considering the $1 per ticket tax starts when there are more than 2.5 million annual attendees, this shouldn't be ignored.

by 202_cyclist on Aug 28, 2013 10:51 am • linkreport

Cavan -- nope. Almost impossible to develop buildings in DC in two years. Those projects had been moving forward for awhile.

And the decision to build on the Anacostia was a shock. The push before had been to build it in what is now NOMA, next to the Metro Station.

by Richard Layman on Aug 28, 2013 10:52 am • linkreport

So now its the knowledge the ballpark was coming that matters, not its actual presence? Plus, I thought you were among those saying that not everything planned actually happens. It seems very unlikely to me that the development community in 2005 was counting on the ballpark plans actually coming to fruition.

Are you aware that USDOT was there between 2006 and 2008? That there was an office building (with DCDOT, I beleive) at M and 3rd? That there was a residential building and a hotel on NJ avenue? That there were office buildings with tenants like Parsons Brinkerhoff west of NJ avenue?

by MStreetDenizen on Aug 28, 2013 10:56 am • linkreport

@Matt

The Dome area is definitely disconnected from the rest of the grid, but most of Atlanta is devoid of a cohesive grid in the first place - so I don't think its success or failure hinges on that. There are so many other contributing factors. Even so, the area brings millions of visitors to downtown every year, which says something.

I do agree that the region as a whole is hostile to pedestrians, but people ALSO don't want to be pedestrians. Perhaps it's a chicken-and-egg issue. Walking, biking, taking transit is just not in Atlanta's DNA except for the small (but growing) contingent of young urbanist types.

I actually went back last weekend to visit some friends & we chatted about this very issue (virtually all my 20-something working professional friends - prime candidates for the urban lifestyle - have now bought or built houses in the suburbs).

Plenty of people will drive 30 minutes to go to Atlantic Station, Piedmont Park, Grant Park, Little Five Points etc. But many feel that spending a premium to live in these areas is not worth it. I am guessing school quality has something to do with it along with the abundance of cheap housing and lots farther out.

Anyway, Go Jackets!

by Scoot on Aug 28, 2013 10:56 am • linkreport

202_cyclist: re attendance, another example, probably of DC doing a bad deal to itself.

According to this: http://ballparkdigest.com/201210055671/attendance/news/2012-major-league-baseball-attendance

The top 13 of 30 teams have greater than 2.5 million attendance. Washington was 14th.

DC should have signed an agreement with that tax kicking in at 2 million, better yet, just charged everyone. Because it's not likely to generate very much money. 9 teams had attendance greater than 3MM; 4 teams between 2.6 and 2.88 million.

2. and the other point I often make about getting the MLB to sign off on charging income tax to visiting players, which most every other jurisdiction can do, but DC can't. MLB was vociferously opposed.

That's a revenue source that other places get (although it probably mostly goes to the state, unless there is a local income tax) that DC doesn't, that could help defray some of the public financing costs. (I don't know if MD charges that tax to professional team events in Baltimore and Landover.)

by Richard Layman on Aug 28, 2013 10:59 am • linkreport

Oh, different point about Atlanta, Georgia and pedestrianism. In the early 2000s, GDOT was excoriated for referring to sidewalks as "accident recovery zones" where out of control drivers could regain control over their motor vehicles.

by Richard Layman on Aug 28, 2013 11:00 am • linkreport

@Dizzy -- oh that final four... so many hopes, crushed so quickly!

by Jacques on Aug 28, 2013 11:08 am • linkreport

wrt Dizzy's last points about urbanism. He gets to the crux of the matter. There are two or three very different issues here:

1. sports teams as the super duper anchor and revitalizer
2. doing the best possible urban design -- integration and context -- and a plan for making sure that the event building strenghens and extends the area around it
3. how the f* to pay for the event building when sports teams-leagues are pretty much are able to bludgeon local governments.

So with regard to the Nationals, I think it's better to have them in the city than not.

With regard to the stadium, "even though it's modern" I agree with Dizzy that over time the fabric will build around it in a good way, even though in terms of 21st century real estate practices it will be taller and denser compared to say Wrigleyville and therefore different, and yes, it will even spread and connect to SW (especially if a mid-way anchor like the soccer stadium is put in between the stadium and the SW waterfront).

And the stadium contributes to the area in a different manner than the site would have were it just office and residential buildings, and it attracts people from out of the city and neighborhood who spend money here.

And yes, I am still angry that DC put so much money into the stadium, that MLB did not, that the Lerners did not, and the contract that DC signed isn't very favorable to DC, to transit, etc., in the way that I wish it would be.

by Richard Layman on Aug 28, 2013 11:08 am • linkreport

Using sidewalks in Atlanta (outside a tiny number of pedestrian-oriented blocks) is a real nightmare. Not only the infrastructure itself but also the interaction with drivers. At best drivers are not attuned to notice pedestrians; at worst (and more often) they are simply hostile. Walking? That's what "those people" do.

For all our complaints of DPW and DDOT we have it very good here in DC compared with Atlanta and many of the sun belt cities!

by Scoot on Aug 28, 2013 11:09 am • linkreport

Was Nationals Park worth it for DC?

The analysis in this post makes a big unstated assumption - that a cost-benefit analysis is the appropriate way to answer the above question. It's worth emphasizing that Nationals Park is a park -- i.e., it is a recreational facility. When we ask whether a recreational facility such as Central Park in NYC is worth it, we don't answer that question by adding up the costs of land acquisition and park construction, comparing it to the subsequent development in a five block radius from Central Park, and then backing out whatever development would have occurred in that area regardless of Central Park.

We don't apply this sort of analysis to a lot of major services provided by government. So, why is Nationals Park being held to a different standard?

I don't dispute the numbers in this article which are well researched and logical. I dispute the validity of the framework which is being applied.

by Falls Church on Aug 28, 2013 11:32 am • linkreport

Falls Church -- you make a good point, but it isn't like to like. Central Park is an asset that for the most part is open to all. The Ballpark is a privatized "public asset" that isn't open to all, it's only open to the people who pay to get in.

That being said, these types of "quasi-civic assets" need to be better integrated into parks planning, which does have cost benefit analysis applied to it by the way, it just also looks at imputed benefits which have dollars associated to them, but are indirect rather than direct costs.

by Richard Layman on Aug 28, 2013 11:36 am • linkreport

@Falls Church:
I'm in support of Nats Park, but the big difference from a public park is that it's actively making money for a private organization who hardly even paid for the stadium in the first place.

by ImThat1Guy on Aug 28, 2013 11:37 am • linkreport

I think we can all agree that the Lerners and Major League Baseball picked our pockets

Perhaps DC could have negotiated a better deal but it's far from clear that is the case. There were other cities competing for the team and there were extraordinary costs associated with moving the team to DC.

The Nationals had to spend months negotiating with the Orioles owner who threatened to block the transaction unless he was compensated for the increased competition. The compensation included a guarantee that the Orioles could always be sold above a certain price and a discounted price the Orioles Television Network would pay for rights to show Nationals games (reducing revenue for the Nationals).

Given the huge pain in the a** moving the team to DC was, it wouldn't surprise me if they had chosen a different city.

by Falls Church on Aug 28, 2013 11:39 am • linkreport

Oh please. Central Park is free and open to everyone. A baseball stadium is not. It's not a park, it's an entertainment venue like a concert hall, music club, theater, etc. And it's one owned by a private, for-profit entity.

I would compare public subsidies for a stadium to public subsidies for something like the 9:30 Club. The stadium probably has some other benefits in that it allows a city to have a team that people can also watch on TV, listen to on radio, etc. But it's not a park where we can all go have a picnic on the grass, despite the name.

by MLD on Aug 28, 2013 11:40 am • linkreport

Falls Church -- you make a good point, but it isn't like to like. Central Park is an asset that for the most part is open to all. The Ballpark is a privatized "public asset" that isn't open to all, it's only open to the people who pay to get in.

The public asset isn't the ballpark, per se - but the team. The team would not be here without a new ballpark. And while the team is a private entity, sports teams are culutral assets with a broader connection to the community than any old business.

Now, we can all nitpick the terms of the deal and try to assess the fairness of it, but the analogy of a pro sports team as solely a private business misses the very real cultural connection between a city and its sports teams.

by Alex B. on Aug 28, 2013 11:44 am • linkreport

the ballpark was inked in 2004.

Actually, the lease wasn't signed until March 2006

by David C on Aug 28, 2013 11:49 am • linkreport

the big difference from a public park is that it's actively making money for a private organization who hardly even paid for the stadium in the first place.

The city built a recreational facility and rents it out to organizations like the Nationals and Paul McCartney concerts that are for-profit. Does it really make a difference if the city is renting out the stadium to a for-profit or non-profit organization?

Furthermore, there are other examples of the city renting out recreational facilities to for-profit organizations. For example, for-profit recreational leagues rent out soccer fields. I know that in Arlington, for-profit tennis instructors can rent/reserve courts. I don't believe there's any requirement to be non-profit in order to get a permit or reserve space through DC dept of parks and rec.

by Falls Church on Aug 28, 2013 11:51 am • linkreport

Alex B. -- the team is a civic asset. So is the event structure. Regardless, you make a very interesting point about how to consider the value of the team beyond most of the normal ways of calculating it.

It happens I am doing a writing project for the Goethe Institut on culture districts (in Europe mostly, but relevant to a project they are doing in Baltimore). I might reach out to some of the academics studying this area, and pose your point to them.

by Richard Layman on Aug 28, 2013 11:52 am • linkreport

a park like central park is too difficult to price. Ergo the proper Benefit cost looks at the number of users and the benefit to them - which is likely to be much higher than zero, despite the price of entry being zero. In the case of the ballpark there MAY be value to consumers above the price of admission, but there may not be much if the Nats pricing strategies are working.

Its like the difference between BCA of a local road thats unpriced, and a tolled highway.

Also, in that case, it should be noted that most of the benefit goes to suburbanites (since most attendees are suburbanites)

Similarly the "cultural" value of the presence of a team, is shared by the suburbs as well. So DC spent a bunch of money for something that mostly helped suburbanites. I think the suburbs are cool with that - now can DC also foot the entire bill for the seperate blue line?

by MStreetDenizen on Aug 28, 2013 11:56 am • linkreport

Falls Church -- appropo of your general point, I have been arguing that parks and recreation master planning needs to incorporate recognition of for profit players in the field and consider them as part of a master plan, and be more open to co-use of spaces.

E.g., is it a bad thing that Lululemon does yoga in Dupont Circle, or that a private school wants to use an adjoining public park playground, should yoga instructors charging a fee be able to use public rec. facilities (many rec. facilities charge fees for service as it is), etc.

wrt the private school and the playground issue, see http://www.gazette.net/article/20091111/News/311119564/0/gazette&template=gazette

by Richard Layman on Aug 28, 2013 11:57 am • linkreport

oh, wrt DCPR as you discussed, I think that leagues, for profit or nonprofit, can still "rent" fields. But a tennis instructor likely can't use DC tennis courts and charge a fee to students. And I don't think someone could use a room in rec/community center and charge fees to the patrons either.

by Richard Layman on Aug 28, 2013 12:01 pm • linkreport

It's not a park, it's an entertainment venue like a concert hall, music club, theater, etc. And it's one owned by a private, for-profit entity.

It's not a park where you can sit on the grass and have a picnic but it is a recreational facility. The fact that you have to pay a fee to whomever is renting it out at the time doesn't change that.

The park is owned by the Washington Sports Authority which is a quasi-public entity. The Board is appointed by the Mayor and while they are not technically a non-profit or part of the government, they are far from a traditional for-profit organization. They are "mission-focused" in that their primary goal is not to make money but to promote tourism and entertainment in DC.

by Falls Church on Aug 28, 2013 12:02 pm • linkreport

@Jacques

Longest bus ride I'll ever take in my life (I can only hope). I'm glad I stayed for the title game, but ugh.

@Richard Layman

Yea, I don't really disagree with any of that. I don't know "the pipeline" at certain points in time - and I doubt too many people do - to know exactly what the certainty of something getting done was at any point in time and what factors were influencing progress along the line. Certainly there were several office projects that were signed/sealed/being delivered prior to ballpark construction. It does get even murkier when you go back to the signing of the ballpark deal and what impact that may have had. Obviously, by the team the team was here and playing in RFK, it was a pretty high percentage bet.

There's also a question of office vs. other kinds of development. People will commute to work in areas where they would never even think about living (see Suitland Federal Complex, IRS in New Carrollton, etc.). So there's also a question of whether Navy Yard would have become a desirable residential area without the promise/presence of the stadium, or whether it would have continued down the path of Crystal City (which isn't to say that no one lives in Crystal City, but you know what I mean).

And yes, the city should've driven a harder bargain, particularly on measures that are tied to enterprise performance (attendance, etc.).

by Dizzy on Aug 28, 2013 12:03 pm • linkreport

In the case of the ballpark there MAY be value to consumers above the price of admission, but there may not be much if the Nats pricing strategies are working.

Many Nats fans in DC may never or rarely go to a game. For those folks, they are clearly getting a value from the team (which would not be here without the stadium) over and above the price of admission.

by Falls Church on Aug 28, 2013 12:05 pm • linkreport

In the case of the ballpark there MAY be value to consumers above the price of admission, but there may not be much if the Nats pricing strategies are working.

One other technical point. The optimal pricing strategy is to make it high enough so that the marginal consumer surplus is zero. That means that the the value to the marginal consumer over and above the price of admission is zero but that to everyone else (i.e., the attendance for a given day minus one) the consumer surplus is positive.

by Falls Church on Aug 28, 2013 12:09 pm • linkreport

I would compare public subsidies for a stadium to public subsidies for something like the 9:30 Club.

I'm neutral on the matter of public financing for sports venues, but I'd be completely behind public subsidy for music venues. Certainly more so than the public subsidy we give to churches.

by oboe on Aug 28, 2013 12:09 pm • linkreport

The team is a civic asset somewhat, but the stadium isn't really because it's useless without the team. Once you have the team though it isn't super likely they will leave; the last move before the Nats was the 2nd Senators, to Texas.

Where else was MLB going to send the Expos? Oklahoma City? Charlotte? The markets without teams are half our size. The idea that they would put the team in Mexico or San Juan was a joke. DC likely could have gotten a better deal.

by MLD on Aug 28, 2013 12:10 pm • linkreport

it seems like a one-sided analysis and calculation if you include all of the costs but only look at the tax revenue from 2008-2013 and not try to estimate this in the years going forward.

Well, I have. I've estimated that it will look similar. But perhaps these numbers will help.

1. If the city continues paying the debt at the current schedule it will pay another $927,555,000 over the next 23 years.

2. During that same time, the Nationals will pay $155,724, 816 in rent

3. So revenue from the ballpark tax would need to cover the other $771,830,184 if we're not considering any externalities. That means $33.5 million a year, which is nearly 3 times larger than the best year reported so far.

As Richard pointed out, the top attendance team in baseball has an attendance about 40% larger than the Nationals. So, it's kind of unlikely that we'll see a 300% increase in attendance. In fact it's less than unlikely, it's impossible. Even if the Nats sold out every game all year they could only get 3,392,928 fans into the stadium (not counting playoffs or games that are never rescheduled) which means attendance can't match Philadelphia's. Even at the maximum, DC would only earn $900,000 extra dollars in rent and that's only if EVERY ticket is sold at its regular price (discounted tickets don't count, even if the discount is only $1). I'm skeptical that would ever happen. Look at Cubs attendance. It's been flat since 1999.

Revenue at the end of the debt payments is unlikely to be larger than 10-20% more than it is now (though there's inflation) especially as the stadium starts to show its age. So, I really think you're overstating this issue. It's likely that the gap will go down in future years - due to rising debt payments, inflation, etc...but there's a strong possibility that revenue drops too. What happens when there's another strike? But if you have any revenue estimates in out years, I'll be glad to throw them into a spreadsheet for you.

by David C on Aug 28, 2013 12:11 pm • linkreport

Baseball is the national pastime. It is our urban history in America. Baseball and its ballparks are part of our urban fabric. As a DC native and resident I'm glad my city went to the trouble to make sure we had it again. And I don't care necessarily that the money works out exactly in the taxpayers favor. Life is more than a balance sheet. Baseball parks are what we do in cities. Major league cities anyway. Lets just celebrate that we have a wonderful ballpark and move on to the next project. Building a home for the DC United.

Football is America's national sport, by such a large margin that it really isn't fair to compare it to any other sport in this country. By any possible definition imaginable, professional football is more popular than baseball and has been since the AFL-NFL merger.

Baseball as "urban history" sounds like some sort of George Will-Ken Burns nostalgia-drivel. One of the most important developments in the history of baseball, a move which literally saved baseball from dying out like horse racing (which used to be very popular) was the move of the Dodgers from the urban oasis of Brooklyn to Los Angeles.

Even more interesting is that you cite he popularity of baseball to support building the Nats Stadium, then call for a new soccer stadium. In the ranking of sports popularity, Soccer is, at best 6th, behind the NFL, MLB, NBA, and college football and basketball. Soccer is the antithesis of a national pastime. It is a niche sport that has never had long-term success in the US (even after Pele sold out Giants Stadium for the Cosmos). The MLS may be growing, but its long-term viability and ability to command major TV revenue (the key to any sport's survival) is by no means certain at this point.

by dcdriver on Aug 28, 2013 12:11 pm • linkreport

Just checked the info on the Washington Sports Authority and while their website is a ".com" they say they are a component of the DC government. So, the stadium is not owned by a private, for-profit entity. It's essentially owned by the DC government like all other recreational facilities.

by Falls Church on Aug 28, 2013 12:14 pm • linkreport

The logic that the Ballpark is not open to all because it charges an admission fee seems a bit tenuous.

By extension, then the Metro system is not open to all either. To say nothing of toll roads, hundreds of state and national parks, museums, public parking spaces, municipal athletic fields, etc.

I think there is a difference between being accessible to everyone, and being free to everyone.

by Scoot on Aug 28, 2013 12:15 pm • linkreport

Dizzy -- wrt your point about the Stadium/Nationals and "Capitol Riverfront" as a desirable place to live, again, you raise a good point.

I used to work with Bruce Robey of Voice of the Hill and would help him distribute papers. He stopped distributing papers on M St. SE because the office workers "were all from Virginia and aren't interested in reading a local community paper to find out about what was going on" -- in other words, each month, till he stopped dropping off papers there, the papers would sit there (unlike say at Sizzlin' Express on Pennsylvania Avenue SE).

The stadium is an element that helped make the area more than an office district, as did plans and the achievement of the creation of Yards Park and Canal Park, having the Metro there, the EYA development, etc.

by Richard Layman on Aug 28, 2013 12:17 pm • linkreport

Where else was MLB going to send the Expos? Oklahoma City? Charlotte? The markets without teams are half our size.

I believe the runner-up was Portland. The reason DC didn't have a team even though it was such a big market had to do with the cost of appeasing the Orioles' owner due to the increased competition. It was a big deterrent to DC getting a team for a long time and MLB spent a lot of money buying out Peter Angelos.

by Falls Church on Aug 28, 2013 12:19 pm • linkreport

Scoot -- you're sounding like the "debate" between F. Scott Fitzgerald and Ernest Hemingway, over the line "the rich aren't like you and me." Hemingway replied "they have more money."

No one can be turned away from Central Park, ever, it's both free and accessible and therefore there are no strictures on access.

A stadium is open to all who can pay. It's not the same.

oboe -- wrt music facilities, there are incentives. It's just who do you give them to? Locals or national chains? That was the issue in DC when House of Music? wanted an incentive and IMP said, "what about us, we've done plenty and you've given us nothing". Similarly, wrt the Fillmore in Silver Spring, which is "owned" by Live Nation, but was mostly built via MoCo funding.

by Richard Layman on Aug 28, 2013 12:21 pm • linkreport

@Richard Layman oh, wrt DCPR as you discussed, I think that leagues, for profit or nonprofit, can still "rent" fields. But a tennis instructor likely can't use DC tennis courts and charge a fee to students. And I don't think someone could use a room in rec/community center and charge fees to the patrons either.

I know we're getting off topic here, but I'd love to see an article (by someone more knowledgeable than me) exploring this - private companies charging for the use of public space. My particular pet peeve is the use of the National Mall by kickball and softball leagues. These leagues charge money to their participants but then instead of buying permits, send people out to "reserve" the National Mall fields - ALL OF THEM - by standing there and telling other would-be users to go away. Want to fly a kite? Have a picnic? Toss a frisbee? Nope, every public field is "reserved" for use of a private, for-profit company. Drives me crazy.

by Ampersand on Aug 28, 2013 12:21 pm • linkreport

Richard, I actually never said that Central Park was analogous to Nationals Park. Clearly Nationals stadium is not a public city park. Falls Church made that comparison, not me.

I was simply taking issue with equating "free for all" with "open to all." I see a distinction.

by Scoot on Aug 28, 2013 12:34 pm • linkreport

private companies charging for the use of public space.

One quick distinction: There's a big difference between "public space" and "space that is owned by a public entity."

To look at your National Mall Kickball example: this is a problem of rationing space. The Mall is public, but more people want to use it at one time than the space allows. How do we allocate that space? One way is with permits. Charging a nominal fee to cover the administration of those permits is normal.

The Pentagon is owned by the public as well, but you can't just waltz in because you're a taxpayer.

by Alex B. on Aug 28, 2013 12:36 pm • linkreport

falls church

thats a simplistic view of pricing strategy - it assumes one price. Like an airline, the Nats try to charge different prices to the more and less price sensititive parts of their market - by having things like last minute sales, by charging high prices for food and drink, etc. That can result in much lower 'consumer surplus' than you get if you do a demand and supply analysis assuming a single price.

That its not free like a park, does not mean its morally bad. But it means that assuming that users of the facility get no consumer surplus is reasonable, at least as a first order approximation.

as for the value to those who dont buy tickets - I find that questionable. Do you mean to TV watchers? To folks who just get a fuzzy feeling knowing the team is there?

In any case, even for those think this is about the iconic/cultural value of having a team - its still useful to do a cost benefit like this is. To answer the question of how much the district is paying for that cultural value. If the RE and sales tax benefits offset the subsidy, the cultural value is free. If not, the question becomes, are you paying 50 million for the cultural value? 100 million? 200 million? Given that there other things you can buy with the money, of cultural or other value, I would think that matters.

I mean foregoing development at McMillan and building a park would be of cultural value. How does the cost of that compare to the cost of the ballpark?

by MStreetDenizen on Aug 28, 2013 12:47 pm • linkreport

"The Pentagon is owned by the public as well, but you can't just waltz in because you're a taxpayer"

the pentagon was cost benefit justified by the need to consolidate war dept and navy dept (it was built before the DoD was formed) offices. Unless we are going to shrink DoD employment by more than 90% its probably BC justified to keep it. It is NOT justified as being a public recreational facility like Central Park.

by MStreetDenizen on Aug 28, 2013 12:49 pm • linkreport

"The stadium is an element that helped make the area more than an office district, as did plans and the achievement of the creation of Yards Park and Canal Park, having the Metro there, the EYA development, etc."

The EYA development was already underway, and I believe had houses sold before the ballpark construction was underway, IIRC. Given the price of apartments in DC within walking distance of a metro station (one 4 stations from gallery place, 2 from L'enfant) in largely transitioned areas (and crime was already down when ballpark construction began) I have a VERY difficult time seeing residential development not coming to the area.

by MStreetDenizen on Aug 28, 2013 12:51 pm • linkreport

Ampersand -- leagues are organized and make a profit for the organizers (same with other things, like certain farmers markets) but are not seen as a for profit entity maybe by the users (the team members) and it is a way to organize their participation, one that they find valuable.

I don't have a problem with for profit leagues using these fields, but they should pay as AlexB sa, via permits.

The argument against them being able to use the fields is not dissimilar from the car owner antipathy toward car sharing "for profit firms" competing with them for the use of "public space" to "park cars."

As a car user resident of DC who is a member of Zipcar and Car2Go, I see these as services serving residents, as well as a component of transportation demand management of curbside space. So they are a platform for serving residents, even if they are intended to make a profit as a corporation. And I think that justifies their use of the public space. Car owners disagree, focusing on that profit making/intending element. And I make the argument that should resident car owners be especially privileged over resident car users over use of the public space? You know what my answer is.

OTOH, what would the car owners say if the car sharing services were nonprofit, as such options are available in Montreal, Philadelphia, Chicago, and San Francisco (and probably in some other places as well)?

by Richard Layman on Aug 28, 2013 12:53 pm • linkreport

also we have completely ignored negative externalities.

Games bring traffic tie ups in the neighborhood. They congest the Navy Yard metro station. They congest the L'enfant plaza metro station.

Note, those dont necessarily mean its a bad thing. But if we are scratching to be inclusive of benefits (as it appears some people are) than the non-monetary costs should be considered as well.

by MStreetDenizen on Aug 28, 2013 12:54 pm • linkreport

David C:
"Well, I have. I've estimated that it will look similar. But perhaps these numbers will help.

1. If the city continues paying the debt at the current schedule it will pay another $927,555,000 over the next 23 years.

2. During that same time, the Nationals will pay $155,724, 816 in rent

3. So revenue from the ballpark tax would need to cover the other $771,830,184 if we're not considering any externalities. That means $33.5 million a year, which is nearly 3 times larger than the best year reported so far."

-------------------------------------------------------

Here is a quick cost/benefit analysis I did.

1) Stadium tax revenue was $9.5M in 2011 (http://www.washingtontimes.com/news/2012/aug/26/when-nationals-win-dc-budget-minders-let-out-big-c/?page=all)
2) Assume one percent annual growth in tax revenue (growth from FY11 - FY12 was significantly higher than one percent)
3) Assume $9M annual stadium-related tax revenue from 2008-2010.

Going from 2011 forward, this would be $330,456,470M in direct stadium related taxes. You noted that the District will receive $155,724,816 in rent (although after 23 years, the District will still likely charge the team for rent, so this revenue stream won't cease). Add another $27M for for 2008-10 direct stadium-related taxes. This comes out to $513M.

I would also subtract $75M from the $927,555,000 stadium cost you mentioned to account for residual value of the stadium and the value of the land.

This comes out to a cost of $339M for the stadium that the District is paying. Next, you would have to add all of the food/drink tax that the surrounding businesses generate for DC. It is fair to say that Justin's, Gordon Biersh, and several other Capital Riverfront businesses cater to the Nationals fans and much of their revenue is from sales before/after the game.

You also have to add tax revenue and economic activity created by stadium employees (several hundred employees mentioned above).

Next, add the property tax revenue the District earned from surrounding Capitol Riverfront development that was accelerated from the stadium.

Finally, although this doesn't seem to be part of a formal cost/benefit analysis, you should account for the intangible benefits such as auto congestion reduction from having the stadium in a walkable, transit accessible location rather than next to I-66 or I-495. Similarly, I would at least acknowledge all of the transportation improvements (Frederick Douglas bridge rehabilitation, second metro entrance, etc...) that is included as a stadium cost but benefits the neighborhood and city more broadly.

by 202_cyclist on Aug 28, 2013 12:55 pm • linkreport

Richard, I actually never said that Central Park was analogous to Nationals Park. Clearly Nationals stadium is not a public city park. Falls Church made that comparison, not me.

Just to clarify my point, I wasn't necessarily saying that Nationals Park is the same as Central Park but I think there's a category they can both fall under. It's a category of government furnished recreational/entertainment/cultural facilities or amenities. They also fall under the broader category of government facilities.

My point is that determining whether it was "worth it" to build a government facility in that category should be decided using a common framework. I don't see how whether the facility is rented out to for-profit or non-profit entities makes a big difference in how we determine whether it was "worth it".

by Falls Church on Aug 28, 2013 12:56 pm • linkreport

To summarize, it is not at all clear that a sports stadium is or has to be a bad financial deal for a city. What matters are the following:

1) the city government negotiates a good deal with the team owners,
2) the stadium is used frequently throughout the year and isn't sitting vacant for 350 days per year,
3) the stadium is well-integrated into the surrounding neighborhood (hopefully served by transit) and is not surrounded by a sea of surface parking.

Some people have a ideological hostility to any public financing for a stadium. If done well, however, it can be beneficial for the District.

by 202_cyclist on Aug 28, 2013 1:00 pm • linkreport

"Finally, although this doesn't seem to be part of a formal cost/benefit analysis, you should account for the intangible benefits such as auto congestion reduction from having the stadium in a walkable, transit accessible location rather than next to I-66 or I-495. Similarly, I would at least acknowledge all of the transportation improvements (Frederick Douglas bridge rehabilitation, second metro entrance, etc...) that is included as a stadium cost but benefits the neighborhood and city more broadly."

The reduction of traffic on i495 WOULD be part if the analysis IF the baseline were building a ballpark in Fairfax AND if the BCA is from a regional viewpoint. But if its from a regional viewpoint, you would need to take into account the sales taxes on ballpark purchases are offset by lost sales taxes on things like movie tickets in Fairfax County. IE the subtitution effect becomes very important. You can only ignore the substition effect if you do the BCA from the District perspective and ignore the POV of the other jurisdictions - in which case there is no reason to worry about congestion on I66 (but there IS reason to worry about congestion on M street, South Cap, etc)

by MStreetDenizen on Aug 28, 2013 1:03 pm • linkreport

If the District can find a way to utilize Nationals Park (or the future DC United stadium) on the days it is not utilized, it would help it be even more cost-beneficial.

One way to do so is allow the two structued parking garages to be used throughout the year when there aren't games and to charge for this parking.

by 202_cyclist on Aug 28, 2013 1:03 pm • linkreport

"Next, add the property tax revenue the District earned from surrounding Capitol Riverfront development that was accelerated from the stadium."

another thing being ignored is where that development would have gone otherwise. lets assume that folks are correct and there would now be, say, 3 fewer residential hirises in Cap Riverfront - would all those people live in the suburbs? Or would, say, NoMa have developed faster instead?

by MStreetDenizen on Aug 28, 2013 1:04 pm • linkreport

My quick cost/benefit analysis above also ignored the revenue from other events held at the stadium, ranging from the small DC Beer microbrew festival to the sold-out Paul McCartney concert.

Hopefully David C. will include this revenue in his cost/benefit analysis.

by 202_cyclist on Aug 28, 2013 1:05 pm • linkreport

I would also subtract $75M from the $927,555,000 stadium cost you mentioned to account for residual value of the stadium and the value of the land.

It's an interesting question as to what a stadium/land is worth when the stadium has exceeded it's useful life. It's cetainly LESS than the value of the land, because the stadium has to be removed. The $55.7 million Silverdome, for example, was sold for $583,000.

This comes out to a cost of $339M for the stadium that the District is paying.

Plus the money we've already paid. The 1% per year growth rate is also too generous when one considers that the trend has been as much down as up.

2008 (1st year at Nats park) - $12.1M
2009 - $9.4
2010 - $10.0
2011 - $9.5
2012 - $9.5
2013 - $9.65 (estimate)

The rest of your comment is about benefits, which is in the next post, but

you should account for the intangible benefits such as auto congestion reduction from having the stadium in a walkable, transit accessible location

Again. No. This is a benefit of the location and a consideration between two locations, not a "benefit" of the stadium. We would have zero stadium related congestion if we didn't build the stadium. So the congestion is a cost (that I've chosen to ignore I'll remind you). Reduced congestion reduces the cost, but it's not a benefit.

by David C on Aug 28, 2013 1:44 pm • linkreport

thats a simplistic view of pricing strategy - it assumes one price. Like an airline, the Nats try to charge different prices to the more and less price sensititive parts of their market - by having things like last minute sales, by charging high prices for food and drink, etc. That can result in much lower 'consumer surplus' than you get if you do a demand and supply analysis assuming a single price.

That its not free like a park, does not mean its morally bad. But it means that assuming that users of the facility get no consumer surplus is reasonable, at least as a first order approximation.

Yes, it's a lower consumer surplus because for every service/product at every price point, you're pricing it at the point of zero marginal consumer surplus. But, just because it's lower doesn't mean it's anywhere close to zero. For it to be zero, it would mean that every consumer is indifferent about whether they attend the game or don't. It seems clear that most people at the stadium are happy to be there, not indifferent.

as for the value to those who dont buy tickets - I find that questionable. Do you mean to TV watchers? To folks who just get a fuzzy feeling knowing the team is there?

It could be TV watchers, people who like following the team in the newspaper or people who just enjoy being fans and having a team to root for and talk about. Most of the enjoyment of being a sports team fan doesn't come from the infrequent opportunities you have to attend a game.

For example, I was a huge Redskins fan and it was a source of great enjoyment for me before I was old enough to ever spend a penny on being a fan. In fact, I'd say that the Redskins were a bigger deal to me before I had money to spend than later in life.

by Falls Church on Aug 28, 2013 1:45 pm • linkreport

David C:
"It's an interesting question as to what a stadium/land is worth when the stadium has exceeded it's useful life. It's cetainly LESS than the value of the land, because the stadium has to be removed. The $55.7 million Silverdome, for example, was sold for $583,000."

The Silverdome was sold in perhaps the most economically depressed city during the worst recession since the Great Depression. I think it is safe to say that the residual value of the land will be worth more than $583,000 thirty years from now.

by 202_cyclist on Aug 28, 2013 1:46 pm • linkreport

My quick cost/benefit analysis above also ignored the revenue from other events held at the stadium

It's my understanding that all of that is reported in the Ballpark Sales Tax numbers. Do you have reason to think otherwise? Is there a reason to think that the District is under-reporting this?

by David C on Aug 28, 2013 1:47 pm • linkreport

David C:
"Plus the money we've already paid. The 1% per year growth rate is also too generous when one considers that the trend has been as much down as up.

2008 (1st year at Nats park) - $12.1M
2009 - $9.4
2010 - $10.0
2011 - $9.5
2012 - $9.5"

The Washington Times (yikes!) article I posted the link for above noted that as of Aug 26, 2012 (i.e. pretty close to the end of the regular season) tax revenue was expected to be $150,000 more in FY12 than FY11. This is more than a one percent increase. Of course stadium-related tax revenue was more during the stadium's first year but it isn't clear that the trend has been downward tax revenue as you suggest.

by 202_cyclist on Aug 28, 2013 1:51 pm • linkreport

"It could be TV watchers, people who like following the team in the newspaper or people who just enjoy being fans and having a team to root for and talk about. Most of the enjoyment of being a sports team fan doesn't come from the infrequent opportunities you have to attend a game."

eh. one can get THOSE benefits following the Orioles, or ones home town team if one grew up in a different city. The drive to Camden Yards - or hell, to Wrigley field - doesnt matter for that.

by MStreetDenizen on Aug 28, 2013 1:56 pm • linkreport

I'm really shenanigans on the argument that residential development wouldn't have happened without the stadium. At a time when the DC housing market is booming, developers had access to huge plots of undeveloped land located within a 10 minute walk of a major employment area (Capitol Hill) and less than 1 mile from FIVE DIFFERENT METRO STOPS. Really? There's no way that place would have EVER been attractive for development?

by 202Ryan on Aug 28, 2013 1:58 pm • linkreport

David C:

"It's my understanding that all of that is reported in the Ballpark Sales Tax numbers. Do you have reason to think otherwise? Is there a reason to think that the District is under-reporting this?"

Yes, there is reason to think otherwise.

http://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/otr_notice_2008-05.pdf

(2) a 12% Ballpark Sales Tax on parking that reasonably relates to all baseball games or baseball-related
events or exhibitions (whether amateur or professional) performed on or after March 30,
2008, at the Ballpark. By contrast, at RFK this tax was just on parking that reasonably related to
professional baseball games and professional baseball-related events or exhibitions (“Professional
Baseball Times”) at RFK;

(3) a 10% Ballpark Sales Tax on certain food, drink, and alcoholic beverages sold on or after
March 30, 2008, for consumption at the Ballpark during such times as reasonably relate to all
baseball games or baseball-related events or exhibitions (whether amateur or professional)
performed at the Ballpark (“Baseball Times”). By contrast, at RFK this tax was just on such
items sold during Professional Baseball Times.

Perhaps I am wrong but Opera in the Outfield, Paul McCartney, and the DC Beer festival are not baseball games or baseball-related events.

by 202_cyclist on Aug 28, 2013 2:00 pm • linkreport

I think it is safe to say that the residual value of the land will be worth more than $583,000 thirty years from now.

Do you have another example of a stadium that was sold? It cost nearly $7M to demolition Texas Stadium. Now the city is leasing it for $1.5 million a year to store DOT trucks on. So, it's not worthless, but the Irving isn't getting rich either.

by David C on Aug 28, 2013 2:00 pm • linkreport

eh. one can get THOSE benefits following the Orioles, or ones home town team if one grew up in a different city. The drive to Camden Yards - or hell, to Wrigley field - doesnt matter for that.

Yes, a DC resident could be a fan of any team in any sport in any city. However, Nats undoubtedly created marginal fan patronage -- i.e., more patronage than would exist without the Nats. That could be from someone who was not a fan of any baseball team until the Nats because there was no local team. It would also include people who became Nats fans in addition to some other team.

For example, I am an Orioles fan having grown up in MD but I also consider myself a Nats fan. The existence of the Nats has added to my total baseball patronage and enjoyment. It was not merely a substitution for Nats patronage over Orioles.

Also, I wouldn't discount the importance of having a local team to be a sports fan. I didn't go to a college with good college sports and as a result I'm not a college sports fan, although theoretically it would be easy to "adopt" any of the major college teams as my own.

by Falls Church on Aug 28, 2013 2:06 pm • linkreport

"For example, I am an Orioles fan having grown up in MD but I also consider myself a Nats fan. The existence of the Nats has added to my total baseball patronage and enjoyment. It was not merely a substitution for Nats patronage over Orioles."

well you have a greater capacity for sports following than I do. For me following the Nats displaced following the O's which in turn displaced following my hometown team. Would it be too personal to say that your high interest in sports (that you follow two baseball teams) might be related to your support for the ballpark? ;)

by M Street Denizen on Aug 28, 2013 2:13 pm • linkreport

David C:
"Do you have another example of a stadium that was sold?"

I don't off-hand but I would think that Candlestick Park in San Francisco, which is going to be redeveloped is probably a better comparison than a stadium in suburban Detroit or Dallas.

by 202_cyclist on Aug 28, 2013 2:17 pm • linkreport

Perhaps I am wrong but Opera in the Outfield, Paul McCartney, and the DC Beer festival are not baseball games or baseball-related events.

Not wrong, but needlessly sarcastic.

And tickets are clearly covered by item 1. So what we're talking about is parking, beverages, food etc... sold at the stadium during these other events. This leads to two questions:

1. Are vendor stalls even open during these other events?
2. This still doesn't say that the sales taxes on sales at other events are not included in the numbers reported for the stadium, only that they aren't subject to the Baseball Sales Tax.

Nonetheless, how many of these events are we talking about? It's likely a rounding error. And heavily subject to the substitution effect. Many of these events would have happened elsewhere in DC. McCartney usually plays Verizon Center for example.

by David C on Aug 28, 2013 2:18 pm • linkreport

technically, the Silverdome was in Pontiac, on I-75 if I recall (I used to live 8 miles away). It'd be about 12 miles from the Detroit's northernmost border. It's in a well to do county, but Pontiac itself is f*ed economically, although that particular location is not really in Pontiac (it was annexed for the stadium), more like close to Bloomfield Township. A stadium site in DC is gonna be worth more. Unless big terrorist attacks come to the city.

by Richard Layman on Aug 28, 2013 2:21 pm • linkreport

David C:

"1. Are vendor stalls even open during these other events?
2. This still doesn't say that the sales taxes on sales at other events are not included in the numbers reported for the stadium, only that they aren't subject to the Baseball Sales Tax.

Nonetheless, how many of these events are we talking about? It's likely a rounding error. And heavily subject to the substitution effect. Many of these events would have happened elsewhere in DC. McCartney usually plays Verizon Center for example."

I didn't go to the Paul McCartney concert (or Elton John concert last year) but these are sold out and it tends to be a more affluent crowd. The Opera in the Outfield event I went to at the stadium had food/beverages for sale.

If you're trying to do a cost/benefit analysis of the stadium (rather than just attacking it because you are opposed to public financing for stadiums) then you need to determine how much tax revenue was generated at all events held at the stadium.

Perhaps some of these concerts would have been held at the Verizon Center but Nationals Park has approximately twice the seating capacity as Verizon.

by 202_cyclist on Aug 28, 2013 2:26 pm • linkreport

If you're trying to do a cost/benefit analysis of the stadium (rather than just attacking it because you are opposed to public financing for stadiums) then you need to determine how much tax revenue was generated at all events held at the stadium.

I'm still of the opinion that I am. I don't believe the Nats or the city would under-report.

But perhaps I've missed this. Perhaps you got me. How much money are we talking about in your opinion?

by David C on Aug 28, 2013 2:56 pm • linkreport

@David C:

This concert was sold out-- 41,480 people (not including employees). Assuming these 41,480 fans spent an average of $15 on food and drink while at the stadium, this would be $62,127 in food/drink tax revenue. Over thrity years, this is $1.86M in tax revenue from concerts at Nationals Park.

I don't know how many people all of these other events have but it would be fair to say that cumulatively, these attract tens of thousands of more attendees annually.

In both cases, these many of these people spend money at adjacent stadium-serving bars and restaurants before/after the events.

by 202_cyclist on Aug 28, 2013 3:05 pm • linkreport

David C:
"I'm still of the opinion that I am. I don't believe the Nats or the city would under-report."

It is probably most likely revenue from concerts and non-baseball events is reported as general food/drink tax revenue and not specifically baseball related.

by 202_cyclist on Aug 28, 2013 3:08 pm • linkreport

$2M over 30 years? Like I said, a rounding error.

by David C on Aug 28, 2013 3:26 pm • linkreport

Someone above said that cost-benefit analysis isn't the right way to answer this type of question. I don't think that's true, necessarily, although some costs and benefits are difficult to quantify, so no such analysis can be completely reliable. (In my own field, the benefits of biodiversity are famously difficult to quantify, which has caused many environmentalists, wrongly in my view, to turn away from cost-benefit analysis.)

A critical aspect of this stadium analysis - which I hope the author will not ignore - is the very large benefit that DC gets from having a baseball team. The team makes some number of DC (and Virginia and Maryland) people happy. That happiness has an economic utility, which can be monetized, though it's not easy to do.

by TonyinShaw on Aug 28, 2013 6:39 pm • linkreport

@Tony

There's a difference between the theoretical perfect cost benefit analysis and CBAs as they are widely done in practice. The happiness derived by citizens is difficult if not impossible to quantify as utility.

What's more important than achieving the nearly impossible goal of the theoretically perfect CBA is using a consistent methodology for evaluating investments/amenities/infrastructure across the board. Of course, some folks will always say that their favored investment is special and the one they oppose should be held to a different standard, for pick your reason -- it helps for-profit organizations, it's for myopic twits and hipsters rather than longtime residents, it only helps the rich, it only helps those who don't pay taxes -- but to be fair and rational most things should be evaluated using a common standard even if that standard is imperfect.

by Falls Church on Aug 28, 2013 9:23 pm • linkreport

Not sure if anyone mentioned this, but another factor for stadiums in the tax revenue from the high-income players, managers, and owners that come with the team. Some fraction of the players actually do settle down in the city where they play, although that is probably a greater benefit to larger states than to the District of Columbia.

by Jim Titus on Aug 28, 2013 9:59 pm • linkreport

"It's nowhere near as isolated as old Tiger Stadium or that stadium's replacements."

Bennett Park/Navin Field/Briggs Stadium/Tiger Stadium, built in 1901 (and modernized from 1912 onwards) was built into a neighborhood and only became "isolated" when freeways were built and neighborhoods began to disappear in the 1950s onwards as a part of first urban renewal and city decline. None of which had anything to do with the stadium.

Comerica Park sits right on the northern part of downtown, right next door to Ford Field, right next door to the Fox Theater, right next door to a number of eateries like Hockeytown Cafe, and nearby the Masonic Temple, Orchestra Hall, Detroit Opera House, St. Andrews Hall, and the Filmore. Plus a block away the cheap People Mover to take you anywhere just about downtown.

It's isolated like Waldo is isolated in the "Where's Waldo" books. Just because you cannot or won't see it, doesn't mean its missing.

As for Nats park. Keep in mind its gonna be around for at least 50 years. See how it plays out by then as the won/loss sum game is figured out.

by Ray B on Aug 29, 2013 1:10 am • linkreport

Jim Titus -- DC barely benefits from tax revenue from employees, including players. Another form of revenue is the taxing of visiting players for day of game income. Unlike most every other jurisdiction in the US, DC is prevented from doing this.

by Richard Layman on Aug 29, 2013 5:29 am • linkreport

Falls Church -- +1MM on this excellent point:

What's more important than achieving the nearly impossible goal of the theoretically perfect CBA is using a consistent methodology for evaluating investments/amenities/infrastructure across the board. Of course, some folks will always say that their favored investment is special and the one they oppose should be held to a different standard, for pick your reason ...

In my experience, the cases for which people tout why their particular project shouldn't be held to the same standards never ever hold up.

I always tout the criteria outlined in this old Boston Globe op-ed. The piece was about eminent domain, but the points pertain to related issues of public funding of projects, sales of publicly owned assets, etc.

http://www.boston.com/news/globe/editorial_opinion/oped/articles/2005/08/12/make_eminent_domain_fair_for_all/

by Richard Layman on Aug 29, 2013 5:32 am • linkreport

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